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An investor is considering investing in either individual stocks or a portfolio of two stocks. The two stocks the investor is researching, Stock A and
An investor is considering investing in either individual stocks or a portfolio of two stocks. The two stocks the investor is researching, Stock A and Stock B, have the following historical return data: a. Calculate the average rate of return and standard deviation for each stock during the 5year period. b. 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. c. 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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