Question

Stocks A and B have the following historical returns:

Year Stock A's Returns, rA Stock B's Returns, rB

2014 (18.50 %) (13.50%)

2015 32.50 19.90

2016 16.75 25.50

2017 (5.00 ) (12.70 )

2018 27.50 34.05

a. 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: %

b. 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. %

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 %

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

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

Select: Stock A or B or Portfolio

Answer 1

Ans:-

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