Imagin two assets with the following yearly returns Using excel, calculate the...
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Imagin two assets with the following yearly returns
Using excel, calculate the average yearly return (use geometric average) for each asset and for the combined 50/50 portfolio. In this example, 50/50 portfolio means that each asset has a 50% share in the total portfolio and that the portfolio is rebalanced each year. Use excel formula STDEV.S() to calculate the standard deviation of returns. Finally, Calculate the correlation between yearly returns of assets A and B using the excel formula CORREL ().
Select everything that is correct.
a.
asset B has a higher annual average return but a lower standard deviation of returns
b.
50/50 portfolio has the highest annual average return
c.
assets A and B are perfectly negatively correlated (correlation coefficient equals -1)
d.
50/50 portfolio has a 0.4 percentage points lower annual average return than asset B, but almost 5 times lower risk
yearly returns year 1 year 2 year 3 year 4 Asset A -6.0% 10.0% -6.0% 10.0% Asset B 18.0% -9.0% 18.0% -9.0% 50/50 portfolio 6.0% 0.5% 6.0% 0.5%
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