Homework 5 Key

# Homework 5 Key - will get full credit if you just use the...

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Q1. If you use the shortcut formulas in Excel spreadsheet, here is the answer: WME Expected Return 9.62 13.21 Variance for Return 10.57644 26.66924889 Std. Dev 3.252143908 5.164227811 Covar 3.734082 Carrel 0.247039383 However, as I mentioned in sections, the default formula in Excel is not so accurate when it calculate the sample covariance and sample correlation, where it uses T instead of T-l as the denominator. That doesn't matter asymptotically, when it does matter when the sample size is only 10. So if you want, you can adjust you covar and correl by multiplying 10/9. Anyway, you

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Unformatted text preview: will get full credit if you just use the default formula in excel and get the answers above. Q.2 i. Expected Return Std. Dev WME 9.62 3.252143908 R&R 13.21 5.164227811 ii. weight of WME weight of R&R sd for p expected return for p 1 5.164227811 13.214 0.1 0.9 4.730749492 12.8548 0.7 0.3 3.025062386 10.6996 0.8 0.2 3.005095306 10.3404 0.9 0.1 3.083138604 9.9812 1 3.252143908 9.622...
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Homework 5 Key - will get full credit if you just use the...

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