Stocks a and b have the following annual realized returns, Ask an Expert

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Stocks A and B have the following annual realized returns:

year	stock A	stock B
2005	-10%	21%
2006	20%	30%
2007	5%	7%
2008	-5%	-3%
2009	2%	-8%
2010	9%	25%

a) What are the average realized returns of the two stocks?

b) What are the standard deviations of the returns of the two stocks?

c) What is the average return and standard deviation of the returns for a portfolio of 70% stock A and 30% stock B?

(Hint: correlation coefficient between returns of A and B is 0.4789.)

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Financial Management, Finance

Category:- Financial Management
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