Portfolio analysis 4. Suppose you form a portfolio that invests 10% in T, 20% in JPM, 30%...

70.2K

Verified Solution

Question

Finance

Portfolio analysis
4. Suppose you form a portfolio that invests 10% in T,20% in JPM, 30% in NEM and 40% in CVX. Calculate (a) portfoliomonthly returns, (b) portfolio's average monthly return, and (c)standard deviation of portfolio monthly returns. Discuss. Highlightyour final answers.
Average Return E (r) of each stock: The average return on eachof these stocks were calculated in excel using today'sprice-yesterdays price/yesterday's price and then the average takenfrom 114 days of adj. closing cost.
Ave. Return E(T)=0.85% StDEV(T)=4.46%
Ave. Return(JPM)=1.36% StDEV(JPM)=6.94%
Ave.Return E(NEM)=0.60% StDEV(NEM)10.30%
Ave. Return E(CVX)=0.90% StDEV(CVX)5.74%
Weight
WW(T)=10%
W(JPM)20%
W(NEM)30%
W(CVX)40%
E (r)ptf = W(T)E(T) + W(JPM)E(JPM) + W(NEM)E(NEM)+W(CVX)E(CVX)
**I calculated in excel and got these answers: Isthe E(r)ptf the portfolio monthly returns or the average monthlyreturn? How do you calculate the (a) portfolio montly returns and(b) the average monthly return?
E(r) ptf=0.90%
StDEV(r) ptf=2.51%

Answer & Explanation Solved by verified expert

4.0 Ratings (780 Votes)

Expected return Er actually means the average return Expectation is a measure of the averaging Here in this equation we are using expected return average returns of the stocks It is crystal clear that the return of See Answer

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