The following information relates to the prices and dividends of two stocks listed on the Ghana Stock Exchange as well as the average market returns.
Stock A
Stock B
Year
Price
Div
Market Returns
2011
20
0
11
2012
24
1.2
13
1.6
0.25
2013
26
0.5
17
0.18
2014
31
1
0.9
0.11
2015
33
1.5
23
0.12
2016
40
2
27
0.15
Required.
1. Calculate the annual returns for each stock (2012-2016)
2.Calculate the average returns for each of the stocks and the market
3.Calculate the covariance between the stocks
4.Assuming the two stocks are equally weighted, calculate the portfolio return and portfolio risk
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