Question: Provided Below is the Average Return, Standard Deviation and Coefficient of Risk Variation of multiple portfolios comprised of the stock components of the Dow Jones

  • Provided Below is the Average Return, Standard Deviation and Coefficient of Risk Variation of multiple portfolios comprised of the stock components of the Dow Jones Industrial Average
  • Part 1) Analyze the risk and return patterns and diversification benefits of the different portfolios, (ie 5 Stock Portfolio vs 30 Stock Portfolio).
  • Part 2) Based on the risk/return analysis, which portfolio selections are the most profitable?
Coefficient of Variation (CV)
5 Stock Portfolios Average Returns St. Deviation CV
AXP+AMGN+AAPL+BA+CAT -0.0002 0.045 -225.00
CSCO+CVX+GS+HD+HON 2.5572 0.0394 0.02
IBM+INTC+JNJ+KO+JPM -0.0003 0.0321 -107.00
MCD+MMM+MRK+MSFT+NKE -0.0026 0.0271 -10.42
PG+TRV+UNH+CRM+VZ -0.0022 0.0289 -13.14
V+WBA+WMT+DIS+DOW -0.0018 0.033 -18.33
10 Stock Portfolios
AXP+AMGN+APPL+BA+CAT+CSCO+CVX+GS+HD+HON -7.817 0.0413 -0.01
IBM+INTC+JNJ+KO+JPM+MCD+MMM+MRK+MSFT+NKE -0.0015 0.0288 -19.20
PG+TRV+UNH+CRM+VZ+V+WBA+WMT+DIS+DOW -0.002 0.0288 -14.40
15 Stock Portfolios
AXP+AMGN+APPL+BA+CAT+CSCO+CVX+GS+HD+HON+IBM+INTC+JNJ+KO+JPM -0.0002 0.0376 -188.00
MCD+MMM+MRK+MSFT+NKE+PG+TRV+UNH+CRM+VZV+V+WBA+WMT+DIS+DOW -0.0022 0.0274 -12.45
30 Stock Portfolio
AXP+AMGN+AAPL+BA+CAT+CSCO+CVX+GS+HD+HON+IBM+INTC+JNJ+KO+JPM+MCD+MMM+MRK+MSFT+NKE+PG+TRV+UNH+CRM+VZ+V+WBA+WMT+DIS+DOW -0.0012 0.0317 -26.42

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Q:

Hi again, I was hoping you can help with this investment management assignment. I am attaching the word document. It is 4 problems about asset management. Thank you for your help! Fin 6310 1. Assume...

Q:

Show formulas on an excel spreadsheet for each step. Integrated Case Chapter 8 Your current employer, Reinzenstein & Jillian Services, an important investment advisory company located in Chicago, has...

Q:

MINI CASE sa financial planner with Est client recently inherited years. 7 Inc., a company that Assume that you recently graduated and landed a job as a financial P Cicero Services, an investment...

Q:

Chapter Review Mini Case Assume that you recently graduated and landed a job as a financial planner with Cicero Services, an investment advisory company. Your first client recently inherited some...

Q:

please fill them up it is so simple thank you. finance exel Chapter 8 Risk and Return rt = (Ct + Pt - Pt-1) / Pt-1 Calculating Return % = Beg Value (Pt-1) End Value (Pt) Dividend (Ct) % Return (rt)...

Q:

Your current employer, Reinzenstein & Jillian Services, an important investment advisory company located in Chicago, has many wealthy clients. One of these clients, Mr. Owen Hyness, is in your...

Q:

First part is correct. I just need help figuring out the rest. Using historical data to measure portfolio risk and correlation coefficient. 7. Using historical data to measure portfolio risk and...

Q:

Assume an investor formed a portfolio comprised of 30% in the common stock of AT&T, Inc., (T) and 70% in the common stock of Apple, Inc. (AAPL). Use the data provided below to calculate the...

Q:

Assume an investor formed a portfolio comprised of 30% in the common stock of AT&T, Inc., (T) and 70% in the common stock of Apple, Inc. (AAPL). Use the data provided below to calculate the...

Q:

Provide solutions for attached questions below. 2. At this point, we can analyze (stability, steady-state gain, sinusoidal steady-state gains, time-constant, etc.) of first-order, linear dynamical...

Q:

Discuss how the financial reporting infrastructure of a country can have a significant impact on financial statements prepared under IFRS.

Q:

A printing press acquired at a cost of $880,000 has an estimated useful life of 10 years, or 75,000 hours, and an expected residual value of $40,000. The press was put into operation on May 21, 2013....

Q:

Which of the following statements is false? Multiple Choice The market rate of interest is used to determine the cash interest payments. The coupon rate is used to determine the cash interest...

Q:

The five generic competitive strategies are not characterized by aSelect one: A . best - cost B . low - cost providerO c . high - cost D . broad differentiation E . narrow differentiationstrategy.

Q:

5.82 An analyst forecasts corporate earnings, and her record is evaluated by comparing actual earnings with predicted earnings. Define the following: actual earnings = predicted earnings + forecast...

Q:

5.90 A market research organization has found that 40% of all supermarket shoppers refuse to cooperate when questioned by its pollsters. If 1,000 shoppers are approached, what is the probability that...

Q:

5.89 It is estimated that amounts of money spent on gasoline by customers at a gas station follow a normal distribution with a standard deviation of $2.50. It is also found that 10% of all customers...