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  3. problem 11-19 diversification (lo3) here are the

Problem 11-19 Diversification (LO3) Here are the returns on two stocks. \table[[,\table[[Digital],[Cheese]],\table[[Executive],[January]]],[February,+16,+9],[March,-3,+2],[April,+5,+6],[May,+7,+14],[June,-4,+3],[July,+3,+7],[August,-2,-3]] ...

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Accounting

Problem 11-19 Diversification (LO3)
Here are the returns on two stocks.
\table[[,\table[[Digital],[Cheese]],\table[[Executive],[January]]],[February,+16,+9],[March,-3,+2],[April,+5,+6],[May,+7,+14],[June,-4,+3],[July,+3,+7],[August,-2,-3]]
Required:
a-1. Calculate the variance and standard deviation of each stock.
a-2. Which stock is riskier if held on its own?
b. Now calculate the returns in each month of a portfolio that invests an equal amount each month in the two stocks.
c. Is the variance more or less than halfway between the variance of the two individual stocks?
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