Consider the following historical returns on two investments A and B. The average risk-free rate during the 2011-2015 period was equal to 3%.

	Annual return (%)
Year	Investment A	Investment B
2015	5%	-5%
2014	-2%	-20%
2013	15%	30%
2012	20%	40%
2011	5%	10%

SHOWING THE WORK:

Calculate the arithmetic average return and the risk premium for each investment. Which investment is likely to be is riskier?

Calculate the geometric average return for each investment.

Calculate the standard deviation for each investment using the arithmetic average return.