The holding Period Rate of Return (HPR) of stocks A and B for the past five years are: Year Stock A 2018 2019 2020 2021

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The Holding Period Rate Of Return Hpr Of Stocks A And B For The Past Five Years Are Year Stock A 2018 2019 2020 2021 1 (46.18 KiB) Viewed 32 times

The holding Period Rate of Return (HPR) of stocks A and B for the past five years are: Year Stock A 2018 2019 2020 2021 2022 Stock B 30% 5% -6% 10% 35% 2% 26% 1% -5% (1) Base on the information provided above, calculate the expected rate of return and 6% 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? 13) 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? 14) 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)