Problem 6-03 The following are the monthly rates of return for Madison Cookies and for Sophie...

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Problem 6-03 The following are the monthly rates of return for Madison Cookies and for Sophie Electric during a six-month period. Madison Cookies Sophie Electric 0.07 -0.03 -0.10 Month 1 -0.03 2 0.07 3. -0.06 4 0.14 5 -0.03 6 0.04 Compute the following. Do not round intermediate calculations. Round your answers to four decimal places. a. Average monthly rate of return R, for each stock. Madison Cookies: Sophie Electric: b. Standard deviation of returns for each stock. Madison Cookies: Sophie Electric: c. Covariance between the rates of return. d. The correlation coefficient between the rates of return. 0.18 -0.06 0.03 Would these two stocks be good choices for diversification? Why or why not? ✔ Madison Cookies and Sophie Electric are -Select- choices for diversification as these assets have -Select- correlation. Problem 6-03 The following are the monthly rates of return for Madison Cookies and for Sophie Electric during a six-month period. Madison Cookies Sophie Electric 0.07 -0.03 -0.10 Month 1 -0.03 2 0.07 3. -0.06 4 0.14 5 -0.03 6 0.04 Compute the following. Do not round intermediate calculations. Round your answers to four decimal places. a. Average monthly rate of return R, for each stock. Madison Cookies: Sophie Electric: b. Standard deviation of returns for each stock. Madison Cookies: Sophie Electric: c. Covariance between the rates of return. d. The correlation coefficient between the rates of return. 0.18 -0.06 0.03 Would these two stocks be good choices for diversification? Why or why not? ✔ Madison Cookies and Sophie Electric are -Select- choices for diversification as these assets have -Select- correlation.

Answer rating: 100% (QA)

Here are the calculations a Average monthly rate of return Madison Cookies 003 007 006 0... View the full answer