QUESTION 6 lote that the question involves historical data and ex post analysis is therefore required Step 1-Calculate the arithmetic mean returns for the security and the market portfolio k k ks0.15+013+0.04-0.12-0.02 =0.036 kn=010+012+006-04+00 Step 2-Calculate the standard deviation of the returns for the security and the market portfolio 015-0036)+1013-006+00-006+(012-0069+(002003 ks 0.012996+0008836+0.000016+0024336+0.003136 =√001233 =0.11104 010-005+(0120053+(00605+(00400+01-05 5-1 0025+00049+0.0001+0.0081+00016 4 =√00043 =0.06557July 2003 QUESTION 6 Note that the question involves historical data and ex post analysis is therefore required. Step 1 – Calculate the arithmetic mean returns for the security and the market portfolio 0.05 5 0.10 0.12 0.06 - 0.04 0.01 k 0.036 5 0.15 0.13 0.04 - 0.12 - 0.02 k n k k m S n i 1 i = + + + = = + + = = = Step 2 – Calculate the standard deviation of the returns for the security and the market portfolio ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) 0.06557 0.0043 4 0.0025 0.0049 0.0001 0.0081 0.0016 5 -1 0.10 - 0.05 0.12 - 0.05 0.06 - 0.05 - 0.04 - 0.05 0.01- 0.05 0.11104 0.01233 4 0.012996 0.008836 0.000016 0.024336 0.003136 5 -1 0.15 - 0.036 0.13 - 0.036 0.04 - 0.036 - 0.12 - 0.036 - 0.02 - 0.036 n -1 k - k 2 2 2 2 2 k 2 2 2 2 2 k n i 1 2 i k m S = = + + + + = + + + + = = = + + + + = + + + + = = =   