Question: Using the data in the following table, , consider a portfolio that maintains a 40% weight on stock A and a 60% weight on stock

Using the data in the following table, , consider a portfolio that maintains a 40% weight on stock A and a 60% weight on stock B. a. What is the return each year of this portfolio? b. Based on your results from part (a), compute the average return and volatility of the portfolio. c. Show that (i) the average return of the portfolio is equal to the (weighted) average of the average returns of the two stocks, and (ii) the volatility of the portfolio equals the same result as from the calculation in Eq. 11.9. d. Explain why the portfolio has a lower volatility than the average volatility of the two stocks. Data table (Click on the following icon in order to copy its contents into a spreadsheet.)

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