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Compute the expected returns and standard deviation of a portfolio

Question 1:

The attached table contains a summary of (daily) data on two stocks and the market.

a) Compute the expected returns and standard deviation of a portfolio composed by 80% WMT and 20% MRK. Comment on your results.

b) Compute the beta for WMT and MRK.

c) Discuss total risk, diversifiable and undiversifiable risk for the two stocks, the portfolio - part a) above - and the market.

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Discuss total risk, diversifiable and undiversifiable risk for the two stocks, the portfolio and the market.

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