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Author Question: Campbells father holds just one stock, East Coast Bank (ECB), which he thinks is a very low-risk ... (Read 52 times)

jlol3

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on: Aug 7, 2023
Campbell’s father holds just one stock, East Coast Bank (ECB), which he thinks is a very low-risk security. Campbell agrees that the stock is relatively safe, but he wants to demonstrate that his father’s risk would be even lower if he were more diversified. Campbell obtained the following returns data shown for West Coast Bank (WCB). Both have had less variability than most other stocks over the past 5 years. Measured by the standard deviation of returns, by how much would his father’s historical risk have been reduced if he had held a portfolio consisting of 70% ECB and the remainder in WCB? (Hint: Use the sample standard deviation formula.)

 

Year

ECB

WCB

2017

35%

45%

2018

–12%

10%

2019

40%

–6%

2020

–8%

–13%

2021

16%

33%

Average return =

14.2%

13.8%

Standard deviation =

23.88%

24.83%

​


◦

3.05%


◦

3.24%


◦

3.50%


◦

3.79%

Financial Management: Theory and Practice ¦ Brigham, Ehrhardt, Gessaroli, Nason ¦ 4th Edition
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Marked as best answer by jlol3 on Aug 7, 2023

hiyayyay

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Reply #1 on: Aug 7, 2023
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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jlol3

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Reply 2 on: Aug 7, 2023
Thanks for the timely response, appreciate it

cam1229

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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