Chapter 11 Page 392 - Chapter 11 Page 392 1 What...

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Chapter 11 Page 392 1. What information do you need to compute the expected return of a portfolio? 2. What does correlation tell us? 3. Why isn’t the total risk of a portfolio simply equal to the weighted average of the risks of the securities in the portfolio? 4. What does beta measure? How do we use beta? 6.What relation is described by the security market line? PROBLEM 5.Download the data for Table 11.3 from My FinanceLab. a. Compute the correction of monthly returns between Dell and Starbucks. b. Compute the monthly standard deviation of Dell and Starbucks. c. Compute the monthly variance and standard deviation of a portfolio of 30% Dell stock and 70% Starbucks stock. Table 11.3 Monthly returns for Starbucks and Dell from January 1996 to December 2006. Starbucks Dell Jan-96 -20.24% - 20.94% Feb-96 5.22% 25.57% Mar-96 32.27% -2.55% Apr-96 16.35% 36.94% May- 96 0.00% 20.71% Jun-96 4.15% -8.13% Jul-96 -7.97% 9.09% Aug- 96 25.96% 20.95%
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Sep-96 0.76% 15.83% Oct-96 -1.52% 4.66% Nov- 96 6.54%
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This note was uploaded on 05/10/2011 for the course STATS 202 taught by Professor Emil during the Spring '11 term at Aberystwyth University.

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Chapter 11 Page 392 - Chapter 11 Page 392 1 What...

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