Question

You've collected the following historical rates of return for stocks A and B:

Year (t)	rA,t	rB,t
2016	0.02	0.02
2015	0.08	0.05
2014	0.12	0.07

Part 1: What was the average annual return for stock A= 0.0733

Part 2: What was the average annual return for stock B?= 0.04667

Part 3: What was the standard deviation of returns for stock A?

Part 4: What was the standard deviation of returns for stock B?

Can you solve Part 3 and 4 using the information given? Part 1 and 2 are already answered.

Answer 1

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