Suppose an investor is interested in investing 20% in Hewly Packers (HPK) and 80% in General Minting (GMIN). The table below provides data on the last five years of prices and dividends paid for the two stocks. (Use of excel is permissible)
Year Hewly Packers General Minting
Price Div Price Div
2013 $45.25 $1.25 $32.25 $0.75
2014 46.50 1.25 32.50 0.75
2015 47.50 1.25 33.62 0.75
2016 46.25 1.25 33.25 0.75
2017 47.75 1.25 34.37 0.75
2018 48.87 1.25 35.12 0.75
a) Calculate the returns for HPK and GMIN separately.
b) Calculate the expected return for HP and GM separately.
c) Calculate the standard deviation for HP and GM separately.
d) Calculate the portfolio expected return.
e) Calculate the correlation coefficient.
f) Calculate the portfolio standard deviation.