Question

Consider the following 6 months of returns for 2 stocks and a portfolio of those 2...

Consider the following 6 months of returns for 2 stocks and a portfolio of those 2 stocks.

Jan

Feb

Mar

Apr

May

Jun

Stock A

2%

5%

-6%

3%

-2%

4%

Stock B

0%

-3%

8%

-1%

4%

-2%

Portfolio

1%

1%

1%

1%

1%

1%

What is the expected return and standard deviation of returns for each of the two stocks?

What is the expected return and standard deviation of return for the portfolio?

Is the portfolio more or less risky than the two stocks? Why?

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