P4.23 The historical returns for two investments-A and B are summarized in the table below for the period 2007 to 2011. Use the data to answer the questions that follow.

Investment A B Year Rate of Return 2007 19% 8% 2008 1 10 2009 10 12 2010 26 14 2011 4 16 Average 12% 12%

a. On the basis of a review of the return data, which investment appears to be more risky? Why?

b. Calculate the standard deviation for each investment's returns.

c. On the basis of your calculations in part

b, which investment is more risky? Compare this conclusion to your observation in part a.