hi, i need help with part C and D please. (a) Four years ago, you bought a share for 50 GBP. The annual returns are successively 10%, 21.5%, 15%, 40.5%. Compute the market value of the share today. (b) Compute the arithmetic average, geometric average and standard deviation of the returns over the past four years of the stock in (a). (c) A portfolio is made up of 30% stocks with arithmetic average and standard deviation of the returns as in (b) and 70% of corporate bonds with annual arithmetic average return equal to 18% and standard deviation of 20%. Knowing that the correlation between the stock and the bond is 35%, compute the arithmetic average return and the historical variance over the past four years. (d) Suppose the risk free rate is equal to 8%. Compute the realized Sharpe ratio of the portfolio in (c) and write the equation for the associated Capital Allocation Line
hi, i need help with part C and D please.
(a) Four years ago, you bought a share for 50 GBP. The annual returns are successively 10%, 21.5%, 15%, 40.5%. Compute the market value of the share today.
(b) Compute the arithmetic average, geometric average and standard deviation of
the returns over the past four years of the stock in (a).
(c) A portfolio is made up of 30% stocks with arithmetic average and standard
deviation of the returns as in (b) and 70% of corporate bonds with annual
arithmetic average return equal to 18% and standard deviation of 20%. Knowing that the correlation between the stock and the bond is 35%, compute the
arithmetic average return and the historical variance over the past four years.
(d) Suppose the risk free rate is equal to 8%. Compute the realized Sharpe ratio of
the portfolio in (c) and write the equation for the associated Capital Allocation
Line.
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