Solution-Calculate the covariance between the stocks

Calculate the covariance between the stocks

Reference no: EM132701197

Question - 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.

Year	Stock A		Stock B		Market return
Year	Price	Div.	Price	Div	Market return
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 -

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

b. Calculate the average returns for each of the stocks and the market.

c. Calculate the covariance between the stocks.

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

Reference no: EM132701197

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Calculate the covariance between the stocks

Reference no: EM132701197

Reference no: EM132701197

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