Deep Water Financial of Duluth, Minnesota, has asked you to evaluate the stock price growth for a...

Question

Deep Water Financial of Duluth, Minnesota, has asked you to evaluate the stock price growth for a portfolio containing the following firms: General Motors, International Business Machines, Potlatch, Inc., Sea Containers, Ltd., and Tata Communications. Compute the means, variances, and covariances for the stocks. Using the data file Stock Price File, compute the mean and variance for a portfolio that represents the five stocks equally. Second, modify the portfolio by removing Potlatch and Sea Containers and including in the portfolio 40% General Motors, 30% International Business Machines, and 30% Tata Communications. Determine the mean and variance for the second portfolio and compare it with the first.

Rajeswari · Accepted Answer

Sheet1
		Year	3M Company	AB Volvo  (ADR)	Alcoa Inc.	General Motors Corporation	Intel Corporation	International Business Machine	Pearson PLC (ADR)	Pentair, Inc.	Potlatch Corporation	Reliant Energy, Inc.	SAFECO Corporation	Safeway Inc.	Sea Containers Ltd.	Senior Housing Properties Trus	TCF Financial Corporation	TeleCommunication Systems, Inc
		2001	84.32	16.5	36.55	24.89	26.66	108.1	14.49	34.81	44.44	26.24	55.68	34.21	0.08	22.68	17.93	3.56
		2002	77.93	13.75	30.01	30.72	20.25	97.15	15.1	31.4	43.82	14.21	62.55	34.56	0.7	24.48	27.42	3.1
		2003	77.5	9.42	29.57	19.42	24.96	82.2	11.87	34.52	50.98	10.32	56.5	23.66	12.54	16.91	27.14	2.2
		2004	82.07	7.92	31.42	40.06	23.39	98.58	12.16	43.56	50.58	13.65	52.24	19.74	19.69	18.94	32.14	3.34
		2005	85.03	6.12	38	53.4	32.05	92.68	11.21	22.85	34.77	7.36	38.93	21.91	18.25	17.23	25.68	4.94
		2006	61.65	3.31	22.78	36.86	15.57	77.5	9.35	17.28	23.88	3.2	34.67	23.36	8.93	10.61	21.85	2.01
		2007	59.11	3.28	35.55	48.6	31.45	120.96	12.28	18.26	29.32	16.51	31.15	41.75	13.68	13.91	23.99	5.

Deep Water Financial of Duluth, Minnesota, has asked you to evaluate the stock price growth for a portfolio containing the following firms: General Motors, International Business Machines, Potlatch,...

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