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    portfolio returns and standard deviation

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    1. Calculating standard deviation and rates of return
    Year 2004 2005 2006 2007 2008
    Rate of Return A 70% -50% 50% 40% 20%
    Rate of Return B 105% 80% -10% -20% 50%
    Calculate the arithmetic return and the standard deviation of returns.
    2. Expected return and pricing
    Your discount rate is 12%
    Dividend at time zero is $1.25
    The expected growth rate is 4%.
    Using the Gordon Model, find the price of the stock.
    3. The CAPM
    Calculate the required rate of return on a stock that has a beta of 2, if the risk-free rate is 4% and the market rate of return is 12%.
    Calculate the required rate of return on a stock that has a beta of .6, if the risk-free rate is 4% and the market rate of return is 12%.

    4. Portfolio Returns
    You have $200,000 to invest. You invest 60% in stock A and 40% in stock B.
    The returns for your stocks are the same as #8 above.
    Year 2004 2005 2006 2007 2008
    Rate of Return A 70% -50% 50% 40% 20%
    Rate of Return B 105% 80% -10% -20% 50%

    Year 2004 2005 2006 2007 2008
    Portfolio Returns
    Portfolio Std Dev.
    Find the portfolio returns and standard deviation for each year.
    .

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    https://brainmass.com/economics/risk-analysis/portfolio-returns-and-standard-deviation-267962

    Solution Summary

    The portfolio returns and standard deviation are assessed.

    $2.19