Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. please explain, variance of a's second subtraction

please explain, variance of a's second subtraction is 0.08 , why is not 0.035 and...

50.1K

Verified Solution

Question

Finance

please explain, variance of a's second subtraction is 0.08 , why is not 0.035 and variance of b's 2nd subtraction, why do we minus from 0.3 not 0.7
image
11-5. Using the data in the following table, estimate (a) the average return and volatility for each stock, (b) the covariance between the stocks, and (c) the correlation between these two stocks. 2006 2008 Year Stock A Stock B 2004 -10% 21% 2005 20% 7% 2007 -5% -3% 5% 30% 2% 2009 9% 25% -8% a. RA= -10+20 + 5 - 5+2 + 9 = 3.5% 6 21+30 + 7 - 3 - 8 + 25 RB 6 = 12% + (-0.1 -0.035) + 18(0.2 - 0.08) + (0.05 - 0.035) + 1 Variance of A = 56(-0.05 -0.035) + (0.02 -0.035) + (0.09 -0.035) 1 I = 0.01123 Volatility of A = SD(R) = Variance of A = 5.01123 = 10.60% + (0.21 - 0.12)' + (0.3 -0.12)* + Variance of B = -(0.07 -0.12) + (-0.03 -0.12)* + -(-0.08 - 0.12) + (0.25 - 0.12) 1 5 @

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Statistics
1.2K views

A state legislator wishes to survey residents of her district to see what proportion of the...

Chemistry
1.2K views

Consider the equilibrium reaction CO(g)+H2O(g)⇋CO2(g)+H2(g) Determine how each change in the left-hand column will stress the system and...

General Management
1.2K views

Applying the Job Characteristics Model, how motivating are Uber’s jobs for drivers?

Basic Math
1.2K views

A manufacturer of television sets is interested in the effect on tube conductivity of four different...

Biology
1.2K views

Bacterial infections have become much more of a threat to human health due to which...

Physics
1.2K views

Illustration 20 An ice box is built of wood 1 75 cm thick lined inside...

Basic Math
1.2K views

10 A client s family brought him lunch from Burger King He consumed the following...

Calculus
1.2K views

Evaluate 152 dV where E is the region described by E 27 0 z 4...

Algebra
1.2K views

From the figure below estimate the weight W of a baby girl who is 1...

Accounting
1.2K views

How can a one cent error cause a IRS penalty? Is it not immaterial?

Accounting
1.2K views

Question #4 On May 1, 2020, Clark Inc. acquired 1,250 shares of Mayson Ltd. for...

Accounting
1.2K views

Given the following information, determine the cost of the inventory at June 30 using the...