Year III. The holding Period Rate of Return (HPR) of stocks A and B for the past five years are: Stock A Stock B 2018 30

[answerhappygod]

Year Iii The Holding Period Rate Of Return Hpr Of Stocks A And B For The Past Five Years Are Stock A Stock B 2018 30 1 (40.65 KiB) Viewed 47 times

Year III. The holding Period Rate of Return (HPR) of stocks A and B for the past five years are: Stock A Stock B 2018 30% 5% 2019 -6% 10% 2020 35% 2% 2021 26% 1% 2022 -5% 6% (1) Base on the information provided above, calculate the expected rate of return and standard deviation for each stock. (2) Calculate coefficient of variation of each stock. If you only want to buy one stock, which one will you select? Why? (3) Determine the correlation coefficient of returns of Stocks A and B. Can you reduce risk by creating a portfolio of the combination of both stocks? Why or why not? (4) If you invest 20% of money on Stock A, and another 80% on Stock B, calculate expected rate of return and standard deviation of this portfolio. Is this portfolio better than individual stock A and B? Why? (18 points)