Problem $11-19$ Diversification $($LO$3)$

Here are the returns on two stocks.

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$$Digital CheeseExecutive FruitJanuary$+17+6$February$4+1$March$+6+5$April$+8+15$May$5+2$June$+4+4$July$34$August$93$

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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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