Consider a portfolio that contains stocks from the following firms: AB Volvo, Pentair, Inc., Reliant Energy, Inc., TCF Financial,3M" role="presentation" style="box-sizing: inherit; margin: 0px;...

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Consider a portfolio that contains stocks from the following firms: AB Volvo, Pentair, Inc., Reliant Energy, Inc., TCF Financial,3M" role="presentation" style="box-sizing: inherit; margin: 0px; padding: 0px; user-select: none; display: inline; line-height: normal; word-spacing: normal; overflow-wrap: normal; white-space: nowrap; float: none; direction: ltr; max-width: none; max-height: none; min-width: 0px; min-height: 0px; border: 0px; position: relative;">3M3MCompany, and Restoration Hardware. Data for these stocks for a 60-month period (May 2003-April 2008) are contained in the data file Return on Stock Price 60 month. Compute the means, variances, and covariances for the monthly stock price growth rate. Determine the mean and variance for a portfolio that contains equal fractions of the six stocks. Construct a second portfolio by removing TCF Financial and Restoration Hardware. Determine the mean and variance of this second portfolio that includes20%" role="presentation" style="box-sizing: inherit; margin: 0px; padding: 0px; user-select: none; display: inline; line-height: normal; word-spacing: normal; overflow-wrap: normal; white-space: nowrap; float: none; direction: ltr; max-width: none; max-height: none; min-width: 0px; min-height: 0px; border: 0px; position: relative;">20%AB Volvo,30%" role="presentation" style="box-sizing: inherit; margin: 0px; padding: 0px; user-select: none; display: inline; line-height: normal; word-spacing: normal; overflow-wrap: normal; white-space: nowrap; float: none; direction: ltr; max-width: none; max-height: none; min-width: 0px; min-height: 0px; border: 0px; position: relative;">30%Pentair,30%" role="presentation" style="box-sizing: inherit; margin: 0px; padding: 0px; user-select: none; display: inline; line-height: normal; word-spacing: normal; overflow-wrap: normal; white-space: nowrap; float: none; direction: ltr; max-width: none; max-height: none; min-width: 0px; min-height: 0px; border: 0px; position: relative;">30%Reliant Energy, and20%3M" role="presentation" style="box-sizing: inherit; margin: 0px; padding: 0px; user-select: none; display: inline; line-height: normal; word-spacing: normal; overflow-wrap: normal; white-space: nowrap; float: none; direction: ltr; max-width: none; max-height: none; min-width: 0px; min-height: 0px; border: 0px; position: relative;">20%3M20%3MCompany. Compare this portfolio with the first and recommend a choice between them.


Answered Same DayJun 28, 2022

Answer To: Consider a portfolio that contains stocks from the following firms: AB Volvo, Pentair, Inc., Reliant...

Rochak answered on Jun 28 2022
89 Votes
Data
    Month    Month    3M Company    AB Volvo (ADR)    Alcoa Inc.    General Motors Corporation    Infosys Technologies Limited (    Intel Corporation    International Business Machine    Microsoft Corporation    Nissan Motor Co., Ltd. (ADR)    Pearson PLC (ADR)    Pentair, Inc.    Piper Jaffray Companies    Potlatch Corporation    Reliant Energy, Inc.    Restoration Hardware, Inc.    SAFECO Corporation    Safeway Inc.    Sea Containers Ltd.    Seagate Technology    Seneca Foods Corporation    Senior Housing Properties Trus    Tata Communications Limited (A    Tata Motors Limited (ADR)    TCF Financial Corporation    TeleCommunication Systems, Inc    "3Mreturns"    SP 500
    200804    1    76.90    15.35    34.78    23.20    43.69    22.26    120.70    28.52    17.73    13.17    36.83    37.26    44.81    25.74    4.35    66.74    31.60    0.06    18.87    20.36    23.95    24.65    16.54    17.40    3.64        1,385.59
    200803    2    79.15    15.10    36.06    19.05    35.77    21.18    115.14    28.38    16.68    13.58    31.90    33.96    4
1.27    23.65    4.35    43.88    29.35    0.07    20.94    21.20    23.70    24.82    15.62    17.92    3.15    0.03    1,322.70
    200802    3    78.40    14.90    37.14    23.28    38.92    19.97    113.86    27.20    18.00    13.24    32.62    38.73    41.27    22.80    4.33    46.26    28.74    0.08    21.57    21.30    21.27    24.80    17.52    18.61    3.10    -0.01    1,330.63
    200801    4    79.65    13.55    33.09    28.21    41.40    21.10    107.11    32.60    19.16    13.85    31.76    47.40    42.93    21.21    4.24    53.37    30.99    0.09    20.27    23.45    22.39    26.57    18.50    21.25    3.57    0.02    1,378.55
    200712    5    84.32    16.50    36.55    24.89    45.36    26.66    108.10    35.60    21.72    14.49    34.81    46.32    44.44    26.24    6.57    55.68    34.21    0.08    25.50    25.99    22.68    37.66    18.86    17.93    3.56    0.06    1,468.36
    200711    6    83.26    17.04    36.37    29.83    42.15    26.08    105.18    33.60    22.90    15.40    33.92    46.32    45.91    26.04    7.06    57.71    34.80    0.05    25.79    25.80    22.09    33.11    18.67    19.41    3.40    -0.01    1,481.14
    200710    7    86.36    19.65    39.59    39.19    50.94    26.90    116.12    36.81    23.03    16.83    35.39    51.40    47.66    27.52    2.96    57.90    34.00    0.15    27.84    26.96    22.42    27.50    19.70    22.77    4.23    0.04    1,549.38
    200709    8    93.58    17.35    39.12    36.70    48.39    25.86    117.80    29.46    20.01    15.46    33.18    53.60    45.03    25.60    3.29    61.22    33.11    0.25    25.58    27.75    22.06    21.92    19.14    26.18    3.99    0.08    1,526.75
    200708    9    90.99    17.30    36.53    30.74    47.71    25.75    116.69    28.73    19.10    14.93    37.13    51.36    45.04    25.51    3.52    58.02    31.73    0.30    25.82    27.52    20.34    20.19    16.95    25.27    4.09    -0.03    1,473.99
    200707    10    88.92    18.43    38.20    32.40    49.60    23.62    110.65    28.99    21.31    15.99    36.20    47.92    43.69    25.68    4.31    58.47    31.87    0.67    23.51    28.00    17.28    23.00    17.15    24.59    4.31    -0.02    1,455.27
    200706    11    86.79    19.89    40.53    37.80    50.38    23.74    105.25    29.47    21.44    16.84    38.57    55.73    43.05    26.95    5.58    62.26    34.03    1.16    21.77    27.39    20.35    23.27    16.42    27.80    5.08    -0.02    1,503.35
    200705    12    87.96    21.03    41.28    29.99    49.25    22.18    106.60    30.69    22.32    17.78    36.99    66.90    43.78    25.62    6.30    62.75    34.48    1.35    20.59    29.53    23.50    22.43    18.64    28.23    5.21    0.01    1,530.62
    200704    13    82.77    19.45    35.49    31.23    52.35    21.50    102.21    29.94    20.16    17.06    32.14    63.81    43.39    22.27    6.28    66.74    36.30    1.43    22.15    28.59    22.83    20.95    18.28    27.08    4.03    -0.06    1,482.37
    200703    14    76.43    16.81    33.90    30.64    50.25    19.13    94.26    27.87    21.40    17.12    31.16    61.94    45.78    20.32    6.56    66.43    36.64    0.67    23.30    28.17    23.90    18.52    16.21    26.36    3.72    -0.08    1,420.86
    200702    15    74.08    15.39    33.41    31.90    54.26    19.86    92.94    28.17    22.99    15.52    31.21    65.23    45.20    16.94    6.68    66.72    34.53    1.15    26.90    29.01    23.94    16.82    18.51    26.46    3.65    -0.03    1,406.82
    200701    16    74.30    14.71    32.30    32.84    58.00    20.96    99.15    30.86    24.99    15.77    31.16    68.94    47.21    14.88    7.01    64.01    36.03    1.06    27.09    24.90    26.02    21.02    20.30    25.38    3.81    0.00    1,438.24
    200612    17    77.93    13.75    30.01    30.72    54.56    20.25    97.15    29.86    24.27    15.10    31.40    65.15    43.82    14.21    8.51    62.55    34.56    0.70    26.50    24.70    24.48    19.20    20.43    27.42    3.10    0.05    1,418.30
    200611    18    81.46    12.99    31.17    29.23    53.53    21.40    91.92    29.36    24.29    14.78    31.86    65.07    41.69    13.42    8.51    60.57    30.81    0.54    25.76    27.39    21.88    19.06    18.06    26.12    3.48    0.04    1,400.63
    200610    19    78.84    12.47    28.91    34.92    52.10    21.34    92.33    28.71    23.94    14.75    32.94    69.15    40.60    12.68    9.53    58.19    29.36    0.74    22.58    27.00    22.93    20.49    18.18    26.03    3.25    -0.03    1,377.94
    200609    20    74.42    11.94    28.04    33.26    47.73    20.57    81.94    27.35    22.46    14.24    26.19    60.62    37.10    12.31    8.67    58.93    30.35    1.17    23.09    27.69    21.34    17.20    18.58    26.29    2.69    -0.06    1,335.85
    200608    21    71.70    11.40    28.59    29.18    44.85    19.57    80.97    25.70    22.77    14.23    29.90    58.58    38.31    13.46    7.03    57.71    30.93    2.28    22.25    23.96    20.35    17.87    18.45    26.07    2.26    -0.04    1,303.82
    200607    22    70.40    10.61    29.95    32.23    41.09    18.00    77.41    24.06    21.55    13.60    28.72    51.19    34.61    12.58    6.80    53.72    28.08    4.40    23.20    24.38    18.59    15.63    15.78    26.91    2.25    -0.02    1,276.66
    200606    23    80.77    9.80    32.36    29.79    38.21    19.00    76.82    23.30    21.98    13.65    34.19    61.21    37.75    11.98    7.18    56.35    26.00    4.75    22.64    23.20    17.91    17.55    17.25    26.45    2.39    0.13    1,270.20
    200605    24    83.66    9.84    31.72    26.93    35.30    18.02    79.90    22.65    24.25    13.60    34.16    63.29    37.67    11.65    6.48    55.37    23.58    8.06    23.35    23.98    17.21    16.74    16.80    26.70    2.33    0.03    1,270.09
    200604    25    85.43    10.08    33.78    22.88    39.33    19.98    82.34    24.15    26.33    13.85    38.28    69.90    38.94    11.35    6.85    51.90    25.13    7.02    26.56    20.50    17.17    18.80    20.73    26.86    2.95    0.02    1,310.61
    200603    26    75.69    9.32    30.56    21.27    38.93    19.46    82.47    27.21    23.78    13.85    40.75    55.00    42.84    10.58    5.69    50.21    25.12    7.21    26.33    20.00    18.10    21.46    20.84    25.75    2.56    -0.13    1,294.87
    200602    27    73.59    8.73    29.32    20.31    35.40    20.60    80.24    26.87    23.01    12.45    40.15    49.68    36.44    10.16    5.38    51.51    24.31    13.15    26.57    19.94    17.93    16.16    18.33    25.36    2.10    -0.03    1,280.66
    200601    28    72.75    9.75    31.50    24.06    38.11    21.26    81.30    28.15    22.35    13.02    38.40    44.83    51.23    10.12    5.23    52.25    23.44    13.72    26.08    19.65    17.93    17.89    16.06    24.99    2.04    -0.01    1,280.08
    200512    29    77.50    9.42    29.57    19.42    40.43    24.96    82.20    26.15    20.44    11.87    34.52    40.40    50.98    10.32    6.02    56.50    23.66    12.54    19.99    19.51    16.91    16.85    14.37    27.14    2.20    0.06    1,248.29
    200511    30    78.48    8.51    27.41    21.90    36.03    26.68    88.90    27.68    20.51    11.64    38.20    39.74    48.34    9.16    5.85    56.25    23.25    12.70    18.92    18.25    18.81    15.61    11.94    27.46    2.25    0.01    1,249.48
    200510    31    75.98    8.21    24.29    27.40    34.00    23.50    81.88    25.70    20.95    11.24    32.49    34.35    44.73    12.70    5.93    55.70    23.26    11.21    14.49    17.88    17.71    13.18    10.64    27.10    2.60    -0.03    1,207.01
    200509    32    73.36    8.74    24.42    30.61    37.14    24.65    80.22    25.73    22.98    11.73    36.50    29.86    52.12    15.44    6.32    53.37    25.60    11.72    15.85    17.90    19.00    16.51    12.33    26.75    2.65    -0.04    1,228.81
    200508    33    71.15    8.62    26.79    34.19    35.40    25.72    80.62    27.38    21.09    12.22    39.48    30.49    54.00    12.50    7.14    52.14    23.73    10.80    16.59    17.50    19.00    17.19    10.34    28.31    2.57    -0.03    1,220.33
    200507    34    75.00    8.34    28.05    36.82    35.59    27.14    83.46    25.61    20.81    12.06    40.17    34.41    57.80    13.26    8.12    54.94    24.30    15.45    19.37    16.10    19.72    19.60    11.35    27.47    2.94    0.05    1,234.18
    200506    35    72.30    8.10    26.13    34.00    38.80    26.02    74.20    24.84    19.88    11.88    42.81    30.43    52.33    12.38    8.16    54.34    22.59    15.97    17.55    16.25    18.91    11.10    9.68    25.88    2.26    -0.04    1,191.33
    200505    36    76.65    8.16    27.10    31.53    36.17    26.96    75.55    25.80    19.66    12.10    44.51    28.27    51.69    12.30    7.08    53.82    22.01    14.00    21.22    16.50    17.99    9.63    9.85    25.88    2.57    0.06    1,191.50
    200504    37    76.47    8.09    29.02    26.68    29.60    23.52    76.38    25.30    19.65    12.25    39.78    27.65    47.23    10.17    6.21    52.67    21.29    16.71    17.58    16.87    17.30    9.35    9.48    25.29    2.48    -0.00    1,156.85
    200503    38    85.69    8.88    30.39    29.39    36.87    23.23    91.38    24.17    20.47    12.26    39.00    36.59    47.07    11.38    5.70    48.71    18.53    18.26    19.55    16.99    16.68    8.42    9.70    27.15    2.67    0.11    1,180.59
    200502    39    83.94    9.18    32.12    35.65    38.13    23.99    92.58    25.16    21.43    12.37    41.44    39.55    46.15    11.99    5.31    47.69    18.40    20.85    17.97    18.55    17.92    9.84    10.88    27.65    2.55    -0.02    1,203.60
    200501    40    84.36    8.08    29.51    36.81    33.02    22.45    93.42    26.28    21.18    11.74    44.32    39.58    46.02    12.45    5.75    46.30    18.85    17.14    16.92    18.25    16.55    10.05    11.63    28.11    2.58    0.00    1,181.27
    200412    41    82.07    7.92    31.42    40.06    34.66    23.39    98.58    26.72    21.92    12.16    43.56    47.95    50.58    13.65    5.74    52.24    19.74    19.69    17.27    18.25    18.94    10.28    11.92    32.14    3.34    -0.03    1,211.92
    200411    42    79.59    8.13    33.98    38.59    36.00    22.38    94.24    26.81    21.00    11.81    40.02    46.01    50.72    11.88    5.09    48.47    19.28    17.61    14.98    19.10    19.68    9.91    11.13    30.91    3.04    -0.03    1,173.82
    200410    43    77.57    7.58    32.50    38.55    33.22    22.26    89.75    27.97    22.51    11.04    37.38    43.73    47.09    10.28    5.15    46.24    18.24    15.35    12.64    18.50    18.76    7.59    9.25    31.52    3.13    -0.03    1,130.20
    200409    44    79.97    7.05    33.59    42.48    28.30    20.06    85.74    27.65    21.66    10.83    34.91    39.59    46.81    9.33    5.18    45.65    19.31    15.23    13.52    18.25    17.82    7.51    8.97    30.29    3.21    0.03    1,114.58
    200408    45    82.36    6.86    32.38    41.31    26.07    21.29    84.69    27.30    21.80    11.27    33.24    43.10    42.90    9.96    6.19    48.17    20.20    15.80    10.93    18.50    17.50    7.39        31.81    4.62    0.03    1,104.24
    200407    46    82.36    7.20    32.03    43.14    25.08    24.38    87.07    28.49    21.44    11.40    31.32    40.75    40.09    9.88    6.54    47.06    21.13    16.85    11.47    18.80    16.70    7.87        30.20    5.40    -...
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