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1 . Suppose you had held a portfolio consisting of 6 0 % of Stock A and 4 0 % of Stock B . Calculate

1 .

Suppose you had held a portfolio consisting of

60 %

of Stock A and

40 %

of Stock B

.

Calculate the average rate of return and standard deviation for the portfolio.

2 .

Suppose you are a risk

-

averse investor. Assuming Stocks A and B are your only choices,

would you prefer to hold Stock A

,

Stock B

,

or the portfolio? Why?

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