Question: Here are the returns on two stocks. Digital Cheese Executive Fruit January +13 +6 February 2 +1 March +4 +4 April +6 +14 May 3

Here are the returns on two stocks.

Digital Cheese Executive Fruit
January +13 +6
February 2 +1
March +4 +4
April +6 +14
May 3 +2
June +2 +5
July 1 2
August 7 1

Required:

a-1. Calculate the variance and standard deviation of each stock.

a-2. Which stock is riskier if held on its own?

b. Now calculate the returns in each month of a portfolio that invests an equal amount each month in the two stocks.

c. Is the variance more or less than halfway between the variance of the two individual stocks?

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