UCLA ECON 106F - Lab3Powerpoint (6 pages)

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Lab3Powerpoint



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Lab3Powerpoint

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Pages:
6
School:
University of California, Los Angeles
Course:
Econ 106f - Finance

Unformatted text preview:

LAB 3 DETE RMINING TH E RISK RE TURN OF A CLIENT S STOCK PORTFOLIO By Linda Che Anna Carter Hernandez MONTHLY AVERAGE RETURNS STOCK ANALYSIS ADM 0 20 HSY 0 57 BA 0 03 IBM 1 29 CAT 1 25 JPM 0 25 DE 1 11 MSFT 0 39 GIS 0 49 PG 0 12 GOOG 0 84 WMT 0 47 VOLATILITY STANDARD DEVIATION STOCK ANALYSIS ADM 9 4 HSY 5 7 BA 9 1 IBM 5 6 CAT 12 5 JPM 10 7 DE 10 7 MSFT 8 1 GIS 4 1 PG 4 9 GOOG 10 3 WMT 4 6 PORTFOLIO ANALYSIS Mean of monthly returns 0 5 Standard deviation of monthly returns 5 65 Annual average returns 19 59 50 00000 40 00000 30 00000 Average Annual Mean Standard Deviation 20 00000 10 00000 0 00000 ADM 10 00000 BA CAT DE GIS GOOG HSY IBM JPM MSFT PG WMT WHAT DO YOU NOTICE ABOUT THE AVERAGE OF THE VOLATILITIES OF THE INDIVIDUAL STOCKS COMPARED TO THE VOLATILITY OF THE EQUALLY WEIGHTED PORTFOLIO The average of the volatilities of the individual stocks begins to decrease as more diverse stocks are included in the equally weighted portfolio The average of the volatilities of the individual stocks relative to the volatility of the portfolio is much greater as the idiosyncratic risk begins to diminish with diversification



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