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Calculate the expected return and standard deviation

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Reference no: EM133073737

The following are monthly percentage price changes for two market indices.

Month

S&P 500

ASX 200

1

0.01

0.03

2

0.05

-0.01

3

-0.01

0.07

4

0.03

0.02

5

0.04

0.02

6

-0.04

0.06

Compute the following:

A: Average monthly rate or return for each index.

B: Standard deviation for each index

C: Covariance between the rates of return for the indices

D: The correlation coefficients for the indices

E: Using the answers from A,B and D, calculate the expected return and standard deviation of a portfolio consisting of equal parts of the S&P and the ASX200. Discuss the two portfolios.

Reference no: EM133073737

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