Question 2 You are an investor and you are looking at two (2) potential stocks for inclusion into your portfolio. You pl

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Question 2 You Are An Investor And You Are Looking At Two 2 Potential Stocks For Inclusion Into Your Portfolio You Pl 1 (155.87 KiB) Viewed 31 times

Question 2 You are an investor and you are looking at two (2) potential stocks for inclusion into your portfolio. You plan to divide your investment equally between the two (2) stocks. The historical performance of the two (2) stocks is shown below: Stock A 6% Stock B 8% Year 2021 2020 2019 2018 2017 -4% 11% 10% 7% -12% 13% 12% 9% (a) Use MS Excel to help you determine the following: Expected return and standard deviation of returns for Stock A and Stock B Portfolio expected return and standard deviation Covariance and correlation between Stock A and B using the formula approach. (No marks to be awarded if MS Excel function is used. You may present your workings in an excel table) (30 marks) (b) Determine if the following statement is TRUE or FALSE and explain your answer. “If a portfolio has a long-run mean return that is reliably above the mean return on the market, then this is evidence that the portfolio manager possesses skill in picking stocks." (10 marks)