Question

Stocks A and B have the following historical returns:

Year	Stock A's Returns, rA		Stock B's Returns, rB
2014	(16.20	%)	(13.00	%)
2015	33.50		24.10
2016	15.00		30.90
2017	(1.75	)	(9.60	)
2018	27.25		25.40

1. Calculate the average rate of return for each stock during the period 2014 through 2018. Round your answers to two decimal places.

   Stock A:   %

   Stock B:   %

2. Assume that someone held a portfolio consisting of 50% of Stock A and 50% of Stock B. What would the realized rate of return on the portfolio have been each year? Round your answers to two decimal places. Negative values should be indicated by a minus sign.

   Year	Portfolio
   2014	%
   2015	%
   2016	%
   2017	%
   2018	%

   What would the average return on the portfolio have been during this period? Round your answer to two decimal places.

     %

3. Calculate the standard deviation of returns for each stock and for the portfolio. Round your answers to two decimal places.

   	Stock A	Stock B	Portfolio
   Standard Deviation	%	%	%

4. Calculate the coefficient of variation for each stock and for the portfolio. Round your answers to two decimal places.

   	Stock A	Stock B	Portfolio
   CV

5. Assuming you are a risk-averse investor, would you prefer to hold Stock A, Stock B, or the portfolio?

   -Select-Stock AStock BPortfolioItem 15

Answer 1

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