Question

3.Stock W and Stock M’s annual returns are as following, calculate the average return, standard deviation for Stock W, Stock M, and an equally weighted portfolio WM (i.e., 50% in W and 50% in M) with explanation.

A: ϱ= -1

Year	Stock W	Stock M	Portfolio WM
2008	40%	-10%	15%
2009	-10%	40%	15%
2010	40%	-10%	15%
2011	-10%	40%	15%
2012	15%	15%	15%
Avg. Return
Stan. Dev.

B: ϱ= 0.35

Year	Stock W	Stock M	Portfolio WM
2008	40%	40%	40%
2009	-10%	15%	2.5%
2010	35%	-5%	15%
2011	-5%	-10%	-7.5%
2012	15%	35%	25%
Avg. Return
Stan. Dev.

Answer 1