years beginning price ENDING PRICE

1 A B A B
2 280 160 340 120
3 340 120 320 170
4 320 170 420 250
5 420 250 370 180
370 180 410 260

YEAR RI RJ RM
1 0.2214285714 -0.2375 0.3
2 -0.0529411765 0.4333333333 -0.17
3 0.31875 0.4823529412 0.28
4 -0.1142857143 -0.272 -0.05
5 0.1135135135 0.4555555556 0.24
0.5 0.86 0.6
SINGLE STOCK
AVERAGE 0.1 0.172 0.12 COVARIANCE (RI,RM)
STANDARD DEVIATIO 0.181694667 0.3904623719 0.2152905014 COVARIANCE (RJ,RM)
VAR 0.033012952 0.1524608639 0.04635 COVARIANCE(RI,RJ)
BETA 0.75 0.05

STOCK A STOCK B TOTAL PORTFOLIO RETURN

0.5 0.5 1 0.136
0.4 0.6 1 0.1432
0.3 0.7 1 0.1504
0.2 0.8 1 0.1576
0.1 0.9 1 0.1648
0 1 1 0.172

STOCK A STOCK B
RISK FREE RETUN 0.09 0.09
RETURN FROM MARKET 0.12 0.12
BETA OF STOCK A AND STOCK B 0.75 0.05
EXPECTED RETURN 0.1125 0.0915

AVERAGE RETURN AS CALCULATED 0.1 0.17

OVER PRICED UNDER PRICED
BUY

STOCK A STOCK B TOTAL PORTFOLIO RETURN

0.5 0.5 1 0.136
0.4 0.6 1 0.1432
0.3 0.7 1 0.1504
0.2 0.8 1 0.1576
0.1 0.9 1 0.1648
0 1 1 0.172
 DIVIDENDS MARKET RETURNS
A B
2.5 2 30%
3 2 -17%
3.5 2 28%
3.5 2 -5%
4 2 24%

COVARIANCE (RI,RM) 0.034815

COVARIANCE (RJ,RM) 0.002417
COVARIANCE(RI,RJ) 0.019294

PORTFOLIO RISK PORTFOLIO BETA

0.0560153893 0.4
0.0694290412 0.33
0.0857804146 0.26
0.1050695096 0.19
0.127296326 0.12
0.1524608639 0.05

PORTFOLIO RISK PORTFOLIO BETA PORT FOLIO REQUIRED RATE OF RETURN

0.0560153893 0.4 0.102
0.0694290412 0.33 0.1299
0.0857804146 0.26 0.9579
0.1050695096 0.19 -0.09788
0.127296326 0.12 -0.03713
0.1524608639 0.05 0.133