Question: Question 4 Here are the returns on Azmn and Mist stocks over the past five months: AZMN JANUARY FEBRUARY MARCH APRIL 15% -3% 7% MEST

Question 4 Here are the returns on Azmn and Mist stocks

Question 4 Here are the returns on Azmn and Mist stocks over the past five months: AZMN JANUARY FEBRUARY MARCH APRIL 15% -3% 7% MEST -3% 3% 4% MAY -1% -4% 13% -2% a. Calculate the standard deviation of the returns of each stock. b. Calculate the standard deviation of the returns of a portfolio that invests in both stocks equally each month. Which stock is least risky if held on its own? Is the standard deviation of your portfolio returns smaller or higher than the standard deviation of this stock? What is the underlying reason to this result? C

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!

Listed below are accounts to use for transactions (a) through (d), each Identified by a number. Following this list are the transactions. You are to indicate for each transaction the accounts that...

is this enough? URLUuuy PIUDICT V2 Rand Co., a new startup business, is preparing budgets for the first quarter 2020 ending March 31. Budgeted sales of the company's only product for the next five...

Sorrentino Company, which has been in business for one year, manufactures specialty Italian pastas. The pasta products start in the mixing department, where durum flour, eggs, and water are mixed to...

Sorrentino Company Sorrentino Company, which has been in business for one year, manufactures specialty Italian pastas. The pasta products start in the mixing department, where durum flour, eggs, and...

Save & Ent Sub McCoy Brothers manufactures and sells two products, A and in the ratio of 4.2. Product A sells for $79, Z sells for $99. Variable costs for product A are $41; for Z $44. Fixed costs...

Here are the returns on two stocks. Digital Cheese +14 -3 +5 +7 January February March April May June July August Executive Fruit +7 +1 +4 +12 +2 +7 -3 -2 -4 +3 -2 -8 Required: a-1. Calculate the...

Kindly answer the question given below Here are the returns on two stocks. Digital Cheese +14 -3 +5 +7 January February March April May June July August Executive Fruit +7 +1 +4 +13 +2 +5 -3 -2. -4...

B. C. D. Here are the returns on two stocks. Digital Cheese +18 -2 +4 Executive Fruit +7 +1 +4 +16 +2 +5 -2 -1 January February March April May June July August +6 -3 +3 -1 -7 Required: a-1....

calculate the variance and standard deviation of each stock which stock is riskier if held on its own now calculate the returns and each month of profolio that invest in equal amount each month in...

1. (TCO 1) Evaluating customer reaction of the trade-off of giving up some features of a product for a lower price would best fit which category of management decisions under activity-based...

I would like to have the detailed workings for the above question also an explanation for the last point , that is, whether the overdrawn bank balance expected to be $ 652 is to be taken into...

Update the table shown in Figure 13-12 given these updated inputs: It is now the end of week 1; customer orders are 35 for week 2, 16 for week 3, 11 for week 4, 8 for week 5, and 3 for week 6....

Assume that both the supply of bottled water and the demand for bottled water rise during the summer but that supply increases more rapidly than demand. What can you conclude about the directions of...

The Finance Department can use which of the following methods to acquire capital for company activities? a . Ourrent Dett, Stock issuets, Bond issues and Protis b . Protts, Current Ditt, Weholding...

On 1 March 2007 DB Limited issued R560 000 15% debentures at R98. The debentures were to be redeemed at par in four equal annual payments starting 28 February 2010. Required: Journalise the above...