Question

# Problem 5 Intro The following table shows rates of return for two stocks. A B C...

Problem 5

Intro

The following table shows rates of return for two stocks.

 A B C 1 Year Stock A Stock B 2 1 14% 13% 3 2 -10% -14% 4 3 -6% -4% 5 4 5% 28% 6 5 14% 8% 7 6 5% 7%

Attempt 1/3 for 10 pts.

Part 1

What is the arithmetic average return for stock B?

Submit

Attempt 1/3 for 10 pts.

Part 2

What is the covariance of returns? (Use =COVARINACE.S function in Excel)

Submit

 Year B 1 14.00% 2 -10.00% 3 -6.00% 4 5.00% 5 14.00% 6 5.00% Average= 3.67%
 Where Average or Mean = Sum of all observations/Count of all observations
 Year B C A = B observation - B average A = C observation - C average A*B 1 14.00% 13.00% 10.33% -1.00% -0.10% 2 -10.00% -14.00% -13.67% -28.00% 3.83% 3 -6.00% -4.00% -9.67% -18.00% 1.74% 4 5.00% 28.00% 1.33% 14.00% 0.19% 5 14.00% 8.00% 10.33% -6.00% -0.62% 6 5.00% 7.00% 1.33% -7.00% -0.09% Average= 3.67% 6.33% Covariance= Sum of all A*Bs = 4.94%

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