You are a junior analyst at New Guy Financial Management. The Head Analyst is doing an analysis for a potential client and explaining the value of diversification and has asked you to look at the historical returns for Austen Corp., Dickens Corp., and a portfolio with 506 weights of each of these stocks. Based on the information you have compiled below please calculate the average return and standard deviation over this 5 year period for each of the stocks and the portfolio. Once you have done that please explain to the Head Analyst how the results show the value of diversification. Returns Year Austen Corp. Dickens Corp. Austen/Dickens Portfolio 2016 40% 40% 40% 2017 -10% 15% 3% 2018 35% -5% 15% 2019 -5% -10% -8% 2020 15% 35% 25%
You are a junior analyst at New Guy Financial Management. The Head Analyst is doing an analysis for a potential client and explaining the value of diversification and has asked you to look at the historical returns for Austen Corp., Dickens Corp., and a portfolio with 506 weights of each of these stocks. Based on the information you have compiled below please calculate the average return and standard deviation over this 5 year period for each of the stocks and the portfolio. Once you have done that please explain to the Head Analyst how the results show the value of diversification. Returns Year Austen Corp. Dickens Corp. Austen/Dickens Portfolio 2016 40% 40% 40% 2017 -10% 15% 3% 2018 35% -5% 15% 2019 -5% -10% -8% 2020 15% 35% 25%
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter6: Risk And Return
Section: Chapter Questions
Problem 5MC: Your client has decided that the risk of the bond portfolio is acceptable and wishes to leave it as...
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Based on the information you have compiled below please calculate the average return and standard deviation over this 5 year period for each of the stocks and the portfolio. Once you have done that please explain to the Head Analyst how the results show the value of diversification.
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