Returns on the stock of First Boston and Midas Metals for the years 2017-2020 are shown below.
$$\begin{array} { | r | r | r | r | }
\hline & \begin{array} { r }
\text { First } \
\text { Boston }
\end{array} & \text { Midas Metals } & \text { Portfolio } \
\hline 2017 & - 18.00 \% & 26.00 \% & \
\hline 2019 & 32.00 \% & - 5.00 \% & \
\hline 2019 & 18.009 / & 3.00 \% & \
\hline 2020 & 1.009 & 10.009 & \
\hline
\end{array}$$ a. Compute the average annual return for each stock and a portfolio consisting of 50% First Boston and 50% Midas.
b. Compute the standard deviation for each stock and the portfolio.
c. Are the stocks positively or negatively correlated and what is the effect on risk?

Question

Returns on the stock of First Boston and Midas Metals for the years 2017-2020 are shown below.
 $$\begin{array} { | r | r | r | r | } 
\hline & \begin{array} { r } 
\text { First } \
\text { Boston }
\end{array} & \text { Midas Metals } & \text { Portfolio } \
\hline 2017 & - 18.00 \% & 26.00 \% & \
\hline 2019 & 32.00 \% & - 5.00 \% & \
\hline 2019 & 18.009 / & 3.00 \% & \
\hline 2020 & 1.009 & 10.009 & \
\hline
\end{array}$$ a. Compute the average annual return for each stock and a portfolio consisting of 50% First Boston and 50% Midas.
b. Compute the standard deviation for each stock and the portfolio.
c. Are the stocks positively or negatively correlated and what is the effect on risk?

Quizplus · Accepted Answer

The Answer of Returns on the stock of First Boston and Midas Metals for the years 2017-2020 are shown below.
 $$\begin{array} { | r | r | r | r | } 
\hline & \begin{array} { r } 
\text { First } \
\text { Boston }
\end{array} & \text { Midas Metals } & \text { Portfolio } \
\hline 2017 & - 18.00 \% & 26.00 \% & \
\hline 2019 & 32.00 \% & - 5.00 \% & \
\hline 2019 & 18.009 / & 3.00 \% & \
\hline 2020 & 1.009 & 10.009 & \
\hline
\end{array}$$ a. Compute the average annual return for each stock and a portfolio consisting of 50% First Boston and 50% Midas.
b. Compute the standard deviation for each stock and the portfolio.
c. Are the stocks positively or negatively correlated and what is the effect on risk?

Returns on the Stock of First Boston and Midas Metals