The following table provides monthly stock returns for Snap Inc. (SNAP), Twitter, Inc. (TWTR). SNAP TWTR 19-May
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Question:
The following table provides monthly stock returns for Snap Inc. (SNAP), Twitter, Inc. (TWTR).
| SNAP | TWTR | |
| 19-May | 6.7% | 8.7% |
| 19-Jun | 20.3% | 4.2% |
| 19-Jul | 17.5% | -21.2% |
| 19-Aug | -5.8% | -0.8% |
| 19-Sep | -0.2% | 3.4% |
| 19-Oct | -4.7% | 27.3% |
| 19-Nov | 1.3% | -3.1% |
| 19-Dec | 7.1% | -3.7% |
| 20-Jan | 12.6% | -1.3% |
| 20-Feb | -22.9% | -2.2% |
| 20-Mar | -16.1% | 26.0% |
| 20-Apr | 48.1% | -16.8% |
| 20-May | -4.8% | 1.9% |
a. Calculate the average monthly return and the standard deviation for each stock.
b. Calculate the average monthly return and the standard deviation of a portfolio that consists of 50% of funds invested in each stock.
c. How does the investor earn benefit from investing in a portfolio? Explain your answer by also calculating the correlation and the coefficient of variation.
Expert Answer:
a To calculate the average monthly return and the standard deviation for each stock we can use the provided monthly stock returns SNAP Average Monthly Return 67 203 175 58 02 47 13 71 126 229 161 481 ... View the full answer
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