You have observed the following returns over time: Stock X Stock Y Year Price Div Price Div Market Returns 2005 20 0 11 0 0 2006 24 1.2 13 1.6 0.25 2007 26 0.5 17 0.5 0.18 2008 31 1 20 0.9 0.11 2009 33 1.5 23 1.2 0.12 2010 40 2 27 1.5 0.15 a. Calculate the annual returns for each stock (2006-2010) b. Calculate the average returns for each of the stocks and the market c. Calculate the covariance between the stocks d. Compute the portfolio return and portfolio risk if the Stock A and Stock B are combined equally in a portfolio.

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A: Given equation, t 0.18 + 0.63βt – 1

Q: Stocks A and B have the following historical returns: Year PA 2009 -17.30% -15.10% 2010 36.75 24.70…

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A: Geometric Rate of return= [(1+r1)*(1+r2)......(1+r3)1/n-1   r1= .10 r2=.20 n=2 years

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Q: Assume these are the stock market and Treasury bill returns for a 5-year period: Stock Market Return…

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Q: Year Stock A return Stock B return 2004 (24.25%) 5.5% 2005 18.5% 26.73% 2006 38.67%…

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Q: 88.0

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A: Thank you for posting questions. Since you have posted multiple questions, as per the guideline I am…

Q: Assume these are the stock market and Treasury bill returns for a 5-year period: Stock Market T-Bill…

A: Risk premium is the difference between the market rate of return and risk free rate.

Q: Assume these are the stock market and Treasury bill returns for a 5-year period: Stock Market T-Bill…

A: Given:

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A: Hello. Since your question has multiple sub-parts, we will solve first three sub-parts for you. If…

Q: The last four years of returns for a stock are as follows: Year 3 4 Return - 4.3% 28.1% 12.3% 3.9%…

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A: Here, Forecast monthly return is ‘rF’ The market return is ‘rM’

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