The following information relates to the prices and dividends of two stocks listed on the Ghana Stock Exchange as well as the average market returns.   Stock A   Stock B Year Price Div Price Div Market Returns 2011 20 0 11 0 0 2012 24 1.2 13 1.6 0.25 2013 26 0.5 17 0.5 0.18 2014 31 1 20 0.9 0.11 2015 33 1.5 23 1.2 0.12 2016 40 2 27 1.5 0.15   Required. 1. Calculate the annual returns for each stock (2012-2016)   2. Calculate the covariance between the stocks   3. Assuming the two stocks are equally weighted, calculate the portfolio return and portfolio risk

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter2: The Domestic And International Financial Marketplace
Section: Chapter Questions
Problem 1P
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The following information relates to the prices and dividends of two stocks listed on the Ghana Stock Exchange as well as the average market returns.

 

Stock A

 

Stock B

Year

Price

Div

Price

Div

Market Returns

2011

20

0

11

0

0

2012

24

1.2

13

1.6

0.25

2013

26

0.5

17

0.5

0.18

2014

31

1

20

0.9

0.11

2015

33

1.5

23

1.2

0.12

2016

40

2

27

1.5

0.15

 

Required.

1. Calculate the annual returns for each stock (2012-2016)

 

2. Calculate the covariance between the stocks

 

3. Assuming the two stocks are equally weighted, calculate the portfolio return and portfolio risk

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