Question

REALIZED RATES OF RETURN

Stocks A and B have the following historical returns:

Year	Stock A's Returns, rA	Stock B's Returns, rB
2011	- 15.90%	- 16.50%
2012	33.50	21.20
2013	11.25	31.60
2014	- 6.00	- 8.80
2015	34.00	29.35

1. Calculate the average rate of return for stock A during the period 2011 through 2015. Round your answer to two decimal places.
   %
   
   Calculate the average rate of return for stock B during the period 2011 through 2015. Round your answer to two decimal places.
   %
   
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. Enter a negative answer with a minus sign.
   

   Year	Portfolio
   2011	%
   2012
   2013
   2014
   2015

   
   
   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? _____

Answer 1