QUESTION 6 You are considering an investment in either individual stocks or a portfolio of stocks. The
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QUESTION 6
You are considering an investment in either individual stocks or a portfolio of stocks. The two stocks you are researching. Stock A and Stock B, have the following historical returns:
Year A B
2014. -21% -6.0%
2015 38.0% 17.0%
2016 20% -13.0%
2017 -9.0% 40.0%
2018 20.0% 11.0%
Suppose you had held a portfolio consisting of 20% Stock A and 80% Stock B.
Calculate the standard deviation of returns for each stock and for the portfolio.
a. | 0.351, 0.420, 0.225 | |
b. | 0.452, 0.321, 0.298 | |
c. | 0.240, 0.208, 0.171 | |
d. | 0.280,0.249, 0.275 |
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