Question

Find the arithmetic average, variance and standard deviation for X and Y. What would the expected return be for a portfolio that consists of 35% in X and 65% in Y? Yr Rx Ry 1 9% 18% 2 -5% 9% 3 18% -2%

Answer 1

Year	X	Y
1	0.09	0.18
2	-0.05	0.09
3	0.18	-0.02
Average=	7.33%	8.33%
Standard dev=	11.59%	10.02%
Variance=	0.01343	0.01003

Where
Average or Mean = Sum of all observations/Count of all observations
Sample Standard deviation =((∑k=1 to N (observationk – average))/(N-1))^(1/2)
Variance = standard deviation^2

Weight of X = 0.35

Weight of Y = 0.65

Exp. Ret. of Portfolio = Weight of X*Exp. Ret. of X+Weight of Y*Exp. Ret. of Y

Exp. Ret. of Portfolio = 7.33*0.35+8.33*0.65

Exp. Ret. of Portfolio = 7.98