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Question

You have the following six years of data covering share A and the market portfolio:

Year Share A Market

Portfolio

2011 7% 9%

2012 4% 2%

2013 6% 15%

2014 1% 5%

2015 -3% -4%

2016 4% 15%

i) Calculate the yearly returns of a portfolio created by allocating your money 30% in share A and 70% in the market portfolio.

ii) Calculate the expected return and standard deviation of stock A.

iii) Calculate the expected return and standard deviation (use population N) of a portfolio made up of 30% investment in share A and 70% in the market.

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