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2. Astra and Bextra are big names in the Textile industry. The following data are for the actual returns on shares of Astra (A) and
2. Astra and Bextra are big names in the Textile industry. The following data are for the actual returns on shares of Astra (A) and that of Bextra (B): Stock A's Returns, rA Stock B's Returns, rB Year Stock A's Returns, rA Stock B's Returns, rB 2001 (24.25%) 5.50% 2002 18.50 26.73 2003 38.67 48.25 2004 14.33 (4.5) 43.86 2005 39.13 a. Calculate the average rate of return for each stock during the period 2001 through 2005. (1+1) b. Assume that someone held a portfolio consisting of twice as many shares of Stock A than that of Stock. What would be the expected return of this portfolio investment? (2) c. Now calculate the standard deviation of return for the portfolio (2) d. Calculate the coefficient of variation of this portfolio investment. (1) e. Interpret the coefficient of variation of the portfolio to help make sound decision. (1)
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