Suppose the security I and security J have the following historical returns:
Year kI kJ
2001 20% 40%
2002 29 36
2003 -12 -25

1. What is the (arithmetic) average return on security I?
2. What is the standard deviation of the return on security I? (Use n-1 for the denominator.)
3. Suppose you invest 50% of your money in I and the rest in J to form a portfolio P. What is the average return on portfolio P?
4. What is the standard deviation of the return on portfolio P? (Use n-1 for the denominator.)

Solution Preview

Please refer attached file for better clarity of tables. Some of the formulas may be missing here.

Solution:

1. What is the (arithmetic) average return on security I?
Arithmetic average return on security I=(20%+29%-12%)/3=12.33%

2. What is the standard deviation of the return on security I? (Use n-1 for the denominator.)
Mean=arithmetic average ...

Solution Summary

Solution describes the steps to calculate mean and standard deviation of historical returns for given stocks and portfolio.

... in laymans terms) step by step how to calculate it. ... by n, the number of dogs to calculate the average ... weight -average weight) that you have calculated and add ...

... For this CLC exercise; a) Calculate the standard deviation for the experimentally obtained values of Keq, DH, and the values calculated for DG, and DS. ...

... b) Calculate the average monthly return and its standard deviation for each ... The solution calculates average monthly return, standard deviation and beta ...

... portfolio for 36 months by calculating weighted average ... Citigroup and Pfiz Then calculate the standard... Portfolio SD= 6.64% monthly (calculated using STDEV for ...

... B. Cal expected return and standard deviation of her ... SOLUTION First calculate the present values of all the ... final part, using a financial calculator: Click on ...

... of variation CV (8-4) return; calculated as r ... If we calculate the coefficients of variation for ... manual for instructions on calculating historical standard...

... Determine which test statistic applies, and calculate it. ... Excel this p-value can be calculated using the ... to conclude that the population standard deviation is ...

... you should have X - values (that is given above), mean and standard deviation. ... for Z-score, you can look into the Standard Normal table ...Calculating Z score. ...

... lie in the interval data is +/- 2 standard error from ... we can use mean and SEM to calculate the confidence ... The mean of these numbers was calculated as well as ...

... SE = SQRT(variance) = SQRT(2) = 1.414 Calculate z = [0 ...Standard Deviation, Exponential Distribution and Expected Values are ... the warranty period is calculated by ...