Jamie Wong is thinking of building an investment portfolio containing two stocks, Land M. Stock L will represent 44% of the dollar value of the portfolio, and stock M will account for the other 56%. The historical returns over the last 6 years, 2013-2018, for each of these stocks are shown in the following table 4. a. Calculate the actual portfolio return, rp, for each of the 6 years. b. Calculate the average return for each stock and for the portfolio over the 6-year period.
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- Jamie Wong is thinking of building an investment portfolio containing two stocks, L and M. Stock L will represent 50% of the dollar value of the portfolio, and stock M will account for the other 50%. The historical returns over the next 6 years, 2013−2018,for each of these stocks are shown in the following table: (see attached table) a. Calculate the actual portfolio return, rp, for each of the 6 years. b. Calculate the expected value of portfolio returns, rp, over the 6-year period. c. Calculate the standard deviation of expected portfolio returns, σrp, over the 6-year period.Jamie Wong is thinking of building an investment portfolio containing two stocks, L and M. Stock L will represent 20%of the dollar value of the portfolio, and stock M will account for the other 80%. The historical returns over the next 6 years, 2013−2018, for each of these stocks are shown in the following table: ( see attached table a. Calculate the actual portfolio return, rp, for each of the 6 years. b. Calculate the expected value of portfolio returns, rp, over the 6-year period. c. Calculate the standard deviation of expected portfolio returns, σrp, over the 6-year period. d. How would you characterize the correlation of returns of the two stocks L and M? e. Discuss any benefits of diversification achieved by Jamie through creation of the portfolio.Jamie Wong is thinking of building an investment portfolio containing two stocks, L and M. Stock L will represent 40% of the dollar value of the portfolio, and stock M will account for the other 60%. The historical returns over the last 6 years, 2013–2018, for each of these stocks are shown in the following table. Expected return. Year Stock L Stock M 2013 14 20 2014 14 18 2015 16 16 2016 17 14 2017 17 12 2018 19 10 A. Calculate the actual portfolio return,, for each of the 6 years. B. Calculate the average return for each stock and for the portfolio over the 6-year period. C. Calculate the standard deviation of returns for each asset and for the portfolio. How does the portfolio standard deviation compare to the standard deviations of the individual assets? D. How would you characterize the correlation of returns of the two stocks L and M? E. Discuss any benefits of diversification achieved by Jamie through creation of the portfolio.
- You are considering an investment in either individual stocks or a portfolio of stocks. The two stocks you are researching, Stock A and Stock B, have the following historical returns: Year rA rB 2014 -20.00% -5.00% 2016 42.00 15.00 2017 20.00 -13.00 2018 -8.00 50.00 2019 25.00 12.00 a. Calculate the average rate of return for each stock during the 5-year period. b. Suppose you had held a portfolio consisting of 50% of Stock A and 50% of Stock B. What would have been the realized rate of return on the portfolio in each year? What would have been the average return on the portfolio during this period? c. Calculate the standard deviation of returns for each stock and for the portfolio. d. Suppose you are a risk-averse investor. Assuming Stocks A and B are your only choices, would you prefer to hold Stock A, Stock B, or the portfolio? Why?Jamie Wong is thinking of building an investment portfolio containing two stocks, L and M. Stock L will represent 40% of the dollar value of the portfolio, and stock M will account for the other 60%. The historical returns over the next 6 years, 2013-2018 for each of these stocks are shown in the following table: 2013 16% 22% 2014 17% 21% 2015 19% 20% 2016 21% 19% 2017 22% 18% 2018 23% 17% a. Calculate the actual portfolio return, r Subscript p for each of the 6 years. b. Calculate the expected value of portfolio returns, r overbar Subscript p " over the 6-year period. C. Calculate the standard deviation of expected portfolio returns, sigma Subscript r Sub Subscript p " over the 6-year period. d. How would you characterize the correlation of returns of the two stocks L and M? e. Discuss any benefits of diversification achieved by Jamie through creation of the portfolio.You are considering an investment in either individual stocks or a portfolio of stocks. The two stocks you are researching, Stock A and Stock B, have the following historical returns: Year r ̄A r ̄B 2014 -20.00% -5.00% 2016 42.00 15.00 2017 20.00 -13.00 2018 -8.00 50.00 2019 25.00 12.00 Calculate the average rate of return for each stock during the 5-year period. Suppose you had held a portfolio consisting of 50% of Stock A and 50% of Stock B. What would have been the realized rate of return on the portfolio in each year? What would have been the average return on the portfolio during this period? Calculate the standard deviation of returns for each stock and for the portfolio. Suppose you are a risk-averse investor. Assuming Stocks A and B are your only choices, would you prefer to hold Stock A, Stock B,…
- a) Assume that you bought 200 stock B in your portfolio for total investment of $1200, now the market price of the stock is $75, the dividend paid for this stock is $2 each year. How much is the capital gain of this stock? b) Assume that the following data available for the portfolio, calculate the expected return, variance and standard deviation of the portfolio given stock A accounts for 45% and stock B accounts for 55% of your portfolio? A B Expected return 12.50% 18.50% Standard Deviation of return 15% 20% Correlation of coefficient (p) 0.4Imagine you wish to estimate the betas for two investments, A and B. You have gathered the following return data for the market and for each of the investments over the past 10 years, 2010-2019 2019 Year 2010 2011 2012 2013 2014 2015 2016 2017 2018 12% Market returns 2% 13% -7% 1% 9% 10% 21% -10% 4% 10% Stock A returns 5% 10% -2% 0% 5% 12% 15% -9% 1% 15% Stock B returns 7% 9% 3% -2% 11% 9% 10% -11% 2% a. On a set of market return (x-axis)-investment return (y-axis) axes, use the data to draw the characteristic lines for investments A and B on the same graph. b. Use the characteristic lines from part a to estimate the betas for investments A and B. c. Use the betas found in part b to comment on the relative risks of investments A and B9. You are considering an investment in either individual stocks or a portfolio of stocks. The two stocks you are researching, Stock A and Stock B, have the following historical returns: Return Year Stock A Stock B 2014 -0.2 -0.05 2015 0.42 0.15 2016 0.2 -0.13 2017 -0.08 0.5 2018 0.25 0.12 a. Calculate the average rate of return for each stock during the 5-year period. b. Suppose you held a portfolio consisting of 50% of Stock A and 50% of Stock B. What would have been the realized rate of return on the portfolio in each year? What would have been the average return on the portfolio during this period? c. Calculate the standard deviation of returns for each stock and for the portfolio.
- You are considering an investment in either individual stocks or a portfolio of stocks. The two stocks you are researching, Stock A and Stock B, have the following historical returns: Year TB 2017 2018 2019 -7.00% 25.00 -13.00 2020 49.00 2021 13.00 FA -16.00% 41.00 24,00 -5.00 23.00 a. Calculate the average rate of return for each stock during the 5-year period. Do not round Intermediate calculations. Round your answers to two decimal places. Stock A: % Stock B: b. Suppose you had held a portfolio consisting of 50% of Stock A and 50% of Stock B. What would have been the realized rate of return on the portfolio in each year? What would have been the average return on the portfolio during this period? Do not round intermediate calculations. Round your answers to two decimal places. Negative values, if any, should be Indicated by a minus sign. Year 2017 2018 2019 % Portfolio % % % % 2020 2021 Average return c. Calculate the standard deviation of returns for each stock and for the…You are considering an investment in either individual stocks or a portfolio of stocks. The two stocks you are researching, Stock A and Stock B, have the following historical returns: Year TA TB 2017 -17.00% -8.00% 2018 34.00 14.00 2019 29.00 -18.00 2020 -5.00 55.00 2021 21.00 19.00 a. Calculate the average rate of return for each stock during the 5-year period. Do not round intermediate calculations. Round your answers to two decimal places. Stock A: 12.40 % Stock B: 12.40 b. Suppose you had held a portfolio consisting of 50% of Stock A and 50% of Stock B. What would have been the realized rate of return on the portfolio in each year? What would have been the average return on the portfolio during this period? Do not round intermediate calculations. Round your answers to two decimal places. Negative values, if any, should be indicated by a minus sign.a. Calculate both the arithmetic and the geometric average return of the following investment;Year 1 2 3 4Return 10.5% 12.2% -5.5% 2.8%(4 marks)b. Teena is considering investing in Stock A and stock B. She plans to invest $ 25,000 in the low riskstock and $ 50,000 in the high-risk stock. You have been given the following information about thesetwo stocks in the table below:Stock A BE(R) 15% 10? 25% 22%Correlation between A and B 0.20Based on the given information above, you are required to:i. Calculate the portfolio weightsii. Calculate the portfolio return.iii. Calculate the portfolio risk.iv. Compare portfolio risk with the individual stock risks and identify the benefit of thediversification of the portfolio.