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Weights, standard deviation, and average returns for 50 stocks and a market index are known. The...

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Finance

Weights, standard deviation, and average returns for 50 stocksand a market index are known. The covariance matrix and correlationis also known. We need to "Pick 5 assets and explain the reason whyyou choose them". On what basis (Eg. The ones with the highestreturns, low standard deviation, etc.)  should we pickour stocks?

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3.9 Ratings (761 Votes)
This question is subjective and hence one might have a different preference or way of choosing these stocks This majorly has to do with the fact that every individual has different risk capability and hence the return that they expect is also different Now having said that    See Answer
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Weights, standard deviation, and average returns for 50 stocksand a market index are known. The covariance matrix and correlationis also known. We need to "Pick 5 assets and explain the reason whyyou choose them". On what basis (Eg. The ones with the highestreturns, low standard deviation, etc.)  should we pickour stocks?

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