show Excel ( show all work including formulars ) You are considering an investment in the stock...

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show Excel ( show all work including formulars)
You are considering an investment in the stock market and haveidentified two potential stocks, they are Westpac Banking Corp.(ASX: WBC) and Singapore Airlines Ltd. (SGX: C6L). The historicalprices for the past 10 years are shown in the table below.
in the table below.
Year
ASX: WBC
SGX: C6L
2009
23.70
13.82
2010
22.85
14.76
2011
21.01
11.1
2012
27.85
10.99
2013
30.66
9.59
2014
34.23
12.65
2015
30.85
11.03
2016
31.71
9.9
2017
30.96
11.31
2018
24.55
9.65
1. Which stocks would you prefer to own? Wouldeveryone make the same choice? Explain your answer(s).
2. Calculate the correlation coefficient between thetwo stocks. Does it appear that a portfolio consisting of WBC andC6L would provide good diversification? Explain your answer(s).
3. Calculate the expected (annual) return if you owneda portfolio consisting of 50% in WBC and 50% in C6L. Would youprefer the portfolio to owning either of the stocks alone?

Answer & Explanation Solved by verified expert

4.0 Ratings (684 Votes)

1 AnswerParticularsStock ASX WBCStock SGX C6LExpected Return278371148Risk Standard Deviation427166Stock ASX WBC is having an higher return with higher Risk whereas Stock SGX C6L is having lower return for lower riskSo risk lovers will take Stock WBC See Answer

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Year	ASX: WBC	SGX: C6L
2009	23.70	13.82
2010	22.85	14.76
2011	21.01	11.1
2012	27.85	10.99
2013	30.66	9.59
2014	34.23	12.65
2015	30.85	11.03
2016	31.71	9.9
2017	30.96	11.31
2018	24.55	9.65