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##### Solve the following problem showing the all the ne...

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Solve the following problem showing the all the necessary steps and computations 1) Using the data in the following table, estimate (a) the average return and volatility for each stock, (b) the covariance between the stock, and (c) the correlation between these two assets. year 2004 2005 2006 2007 2008 2009 ------------------------------------------------------- stockA -10% 20% 5% -5% 2% 9% stock B 21% 7% 30% -3% -8% 25% ------------------------------------------------------ 2)Suppose all possible investment opportunities in the world are limited to the five stocks listed in the table below. stock price /share(s) number of shares outstanding ------------------------------------------------------- A 10 10 B 20 12 C 8 3 D 50 1 E 45 20 ------------------------------------------------------- what does the market portfolio consist of (what are the portfolio weight)? Using the data above ,suppose you are holding a market portfolio and have invested in stock C a. how much have you invested in stock A? b. how many shares of stock C do you hold? c. if the price of stock C suddenly drops to $4 per share, what trades would you need to make to maintain a market portfolio,i hope you accept my problem and solve it well

Paper#7076 | Written in 18-Jul-2015

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