Question: Please show all your work - formulas, inputs and results. 1. You have observed the following returns over time: (a) Calculate the average returns for

Please show all your work - formulas, inputs and results. 1. You have observed the following returns over time: (a) Calculate the average returns for stocks X and Y. (b) Calculate the variances and standard deviations for stocks X and Y. (c) Calculate the covariance between stocks X and Y. What is the correlation coefficient? (d) Assuming you invest 50% of your wealth in stock X and 50% in stock Y, what is the return on the new portfolio you formed? (c) Calculate the standard deviation of the portfolio. 2. Suppose you are the money manager of a $4 million investment fund. The fund consists of 4 stocks with the following investments and betas: If the market required rate of return is 14% and the risk-free rate is 6%, what is the fund's required rate of return? 3. Suppose the risk-free rate is 5%, the market rate of return is 12% and the rate of return on the stock of company A is 12%. (a) Calculate the beta for Company A's stock. (b) If the stock of Company A has a beta of 2.0 , what would be the new required rate of return for Company A's stock

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