12. What would be the expected return and variance of a portfolio with 60% inves
ID: 2744370 • Letter: 1
Question
12. What would be the expected return and variance of a portfolio with 60% invested in Google and 40% invested in Yahoo? Is the risk of the portfolio higher or lower than the risk of the individual securities?
Month
Monthly Returns (%)
Month
Monthly Returns (%)
Month
Monthly Returns (%)
Ended
Yahoo
S&P500
Ended
Yahoo
S&P500
Ended
Yahoo
S&P500
Dec-07
-13.241
-0.219
-0.692
Dec-06
-5.442
-5.018
1.403
Dec-05
-2.610
2.457
0.036
Nov-07
-13.794
-1.980
-4.182
Nov-06
2.544
1.767
1.899
Nov-05
8.818
8.806
3.778
Oct-07
15.861
24.632
1.590
Oct-06
4.193
18.534
3.257
Oct-05
9.249
17.595
-1.668
Sep-07
18.093
10.096
3.736
Sep-06
-12.314
6.174
2.575
Sep-05
1.561
10.650
0.810
Aug-07
-2.237
1.029
1.497
Aug-06
6.227
-2.087
2.376
Aug-05
-0.060
-0.612
-0.912
Jul-07
-14.302
-2.430
-3.097
Jul-06
-17.758
-7.805
0.616
Jul-05
-3.781
-2.172
3.717
Jun-07
-5.470
4.979
-1.660
Jun-06
4.463
12.778
0.133
Jun-05
-6.855
6.088
0.143
May-07
2.354
5.628
3.486
May-06
-3.630
-11.035
-2.875
May-05
7.826
26.032
3.179
Apr-07
-10.387
2.885
4.428
Apr-06
1.612
7.164
1.342
Apr-05
1.770
21.877
-1.896
Mar-07
1.393
1.938
1.116
Mar-06
0.624
7.551
1.244
Mar-05
5.051
-3.979
-1.769
Feb-07
9.007
-10.379
-1.950
Feb-06
-6.735
-16.188
0.271
Feb-05
-8.350
-3.900
2.103
Jan-07
10.846
8.908
1.511
Jan-06
-12.264
4.291
2.648
Jan-05
-6.555
1.468
-2.437
Month
Monthly Returns (%)
Month
Monthly Returns (%)
Month
Monthly Returns (%)
Ended
Yahoo
S&P500
Ended
Yahoo
S&P500
Ended
Yahoo
S&P500
Dec-07
-13.241
-0.219
-0.692
Dec-06
-5.442
-5.018
1.403
Dec-05
-2.610
2.457
0.036
Nov-07
-13.794
-1.980
-4.182
Nov-06
2.544
1.767
1.899
Nov-05
8.818
8.806
3.778
Oct-07
15.861
24.632
1.590
Oct-06
4.193
18.534
3.257
Oct-05
9.249
17.595
-1.668
Sep-07
18.093
10.096
3.736
Sep-06
-12.314
6.174
2.575
Sep-05
1.561
10.650
0.810
Aug-07
-2.237
1.029
1.497
Aug-06
6.227
-2.087
2.376
Aug-05
-0.060
-0.612
-0.912
Jul-07
-14.302
-2.430
-3.097
Jul-06
-17.758
-7.805
0.616
Jul-05
-3.781
-2.172
3.717
Jun-07
-5.470
4.979
-1.660
Jun-06
4.463
12.778
0.133
Jun-05
-6.855
6.088
0.143
May-07
2.354
5.628
3.486
May-06
-3.630
-11.035
-2.875
May-05
7.826
26.032
3.179
Apr-07
-10.387
2.885
4.428
Apr-06
1.612
7.164
1.342
Apr-05
1.770
21.877
-1.896
Mar-07
1.393
1.938
1.116
Mar-06
0.624
7.551
1.244
Mar-05
5.051
-3.979
-1.769
Feb-07
9.007
-10.379
-1.950
Feb-06
-6.735
-16.188
0.271
Feb-05
-8.350
-3.900
2.103
Jan-07
10.846
8.908
1.511
Jan-06
-12.264
4.291
2.648
Jan-05
-6.555
1.468
-2.437
Explanation / Answer
Average return of Yahoo= -34.29/36 -0.95 Average return of Google= 145.52/36 4.04 So portfolio return=0.4*(-0.95)+0.6*4.04 2.044
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.