Question

In: Finance

year rA rB 2009 -20.50 -17.50 2010 20.50 29.30 2011 14.00 33.80 2012 -4.50 -7.10 2013...

year rA rB
2009 -20.50 -17.50
2010 20.50 29.30
2011 14.00 33.80
2012 -4.50 -7.10
2013 25.76 -3.25

Calculate the average rate of return for stock A during the period 2009 through 2013. Round your answer to two decimal places.
%______

Calculate the average rate of return for stock B during the period 2009 through 2013. Round your answer to two decimal places.
%_____

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 in each year? Round your answers to two decimal places.

Year Portfolio
2009 %
2010 %
2011 %
2012 %
2013 %

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 Stock C
Std Dev

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

Stock A Stock B Stock C
Coef. Var.

Solutions

Expert Solution

I have used excel to do the calculations. Please find below the snapshot of the solution:

  1. Below the values, I have inserted a row titled "Formula Used". That will help you to understand the formula in each cell used to calculate average return, std deviation and coefficient of variation.
  2. You can use the formula to understand the mathematics and create your own sheet.
  3. The final answers are highlighted in yellow.
  4. Stock C in your solution template actually refers to Portfolio. Portfolio return has been calculated as = wA.rA + wB.rB = 0.5 x rA + 0.5 x rB
  5. Coefficient of variation = standard deviation / average return
  6. In the end i have filled in the answers in your template. That will help you understand what need to be fed into the blanks.

Please have a look at the snapshot below:

So your final answers will be:

Calculate the average rate of return for stock A during the period 2009 through 2013. Round your answer to two decimal places.
% 7.05

Calculate the average rate of return for stock B during the period 2009 through 2013. Round your answer to two decimal places.
%7.05

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 in each year? Round your answers to two decimal places.

Year Portfolio
2009 -19.00%
2010 24.90%
2011 23.90%
2012 -5.80%
2013 11.26%

What would the average return on the portfolio have been during this period? Round your answer to two decimal places.
%7.05

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

Stock A Stock B Stock C (Portfolio)
Std Dev 17.16% 20.59% 17.11%

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

Stock A Stock B Stock C (Portfolio)
Coef. Var.                                        2.43                                             2.92                                   2.43

jeff jeffy answered 1 year ago
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