a. Consider the following 6 months of returns for 2 stocks and a portfolio of those 2 stocks: The portfolio is composed of 50% of Stock A and 50% of Stock B.

Jan		Feb		Mar		Apr		May		Jun
Stock A	2%		5%		6%		3%		2%		4%
Stock B	1%		2%		9%		0%		5%		1%
Portfolio	1.5%		1.5%		1.5%		1.5%		1.5%		1.5%

a. What is the expected return and standard deviation of returns for each of the two stocks? (round to five decimal places)

b. What is the expected return and standard deviation of returns for the portfolio? (round to five decimal places)

c. Is the portfolio more or less risky than the two stocks? Why?

b.

The last four years of returns for a stock are as follows:

Year	1	2	3	4
Return	4.3%	27.5%	11.5%	3.9%

a. What is the average annual return? 9.65 answer

b. What is the variance of the stock's returns? (round to five decimal places)

c. What is the standard deviation of the stock's returns? (round to five decimal places)