Question: Suppose that Stock 1's monthly log return is 40% and that Stock 2's monthly log return is -60%. Your portfolio includes 70% of Stock 1 and 30% of Stock 2. Please compute the following:
(a). What are the monthly simple returns of Stock 1 and Stock 2?
(b). What is the monthly simple return of your portfolio?
(c). What is the annualized simple return of your portfolio?