#5. A portfolio has exhibited the following returns over the past 7-years. Year -7 Year...
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#5. A portfolio has exhibited the following returns over the past 7-years. Year -7 Year -6 Year Year 4 Year -3 Year -2 Year -1 -1.30% -0.50% 21.9% 2.35% 8.20% 15.05% 9.95% (a) What was the mean (i.e., arithmetic average) return over this period? (b) What was the variance and standard deviation of returns over this period? (C) What was the geometric average return over this period? Chapter 11 Problems #6. Consider the return behavior of the following two stocks: .25 7.2% State of Economy Probability of State Return on Stock A Return on Stock B Recession -4.0% 7% Normal .60 8.2% Boom .15 13.4% 9.4% (a) Calculate the expected return on each stock. (b) Calculate the standard deviation of the return on each stock. (c) Calculate the covariance and correlation of returns between the two stocks
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