Question
4. Stocks A and B have the following historical returns: Year Stock As Returns, rA Stock Bs Returns, rB 2013 -18.00% -14.50% 2014 33 21.8
4. Stocks A and B have the following historical returns:
Year | Stock As Returns, rA | Stock Bs Returns, rB |
2013 | -18.00% | -14.50% |
2014 | 33 | 21.8 |
2015 | 15 | 30.5 |
2016 | -0.5 | -7.6 |
2017 | 27 | 26.3 |
a. Calculate the average rate of return for each stock during the period 2013 through 2017.
b. 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? What would the average return on the portfolio have been during this period?
c. Calculate the standard deviation of returns for each stock and for the portfolio.
d. Calculate the coefficient of variation for each stock and for the portfolio.
e. Assuming you are a risk-averse investor, would you prefer to hold Stock A, Stock B, or the portfolio? Why?
Please answer all parts these are all part of one question.
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