Homework III

Ex.4 Calculating average return and standard deviation for a portfolio given historical data. You have the following information for three stocks for 2015-2019. You invested 50% of your money on stock A and 50% on stock B(WA=0.5 and Ws=0.5) for each of above years. What were the average return and standard deviation of your portfolio? Average return =[17.5+16.5+16.0+17.0+18.0]/5=17% Average retum =Wa Average return on A+Wb Average return on B =0.519%+0.515%=17% Variance=[(17.517.0)2+(16.517.0)2+(16.017.0)2+(17.017.0)2+(18.017.0)2]/[51]=2.5/4 Variance 0.625 Standard Deviation =0.625=0.7906% HOMEWORK III: Find the portfolio risk (standard deviation) and average return for the following portfolios (use the information given in Ex. 4 above): Portfolio 111 means that you invested 20% of your moncy on stock A and 80% of your moncy on B shown above (Ex.4)