Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

eBook Historical Realized Rates of Return You are considering an investment in either individual stocks or a portfolio of stocks. The two stocks you are

  • eBook

Historical Realized Rates of Return

You are considering an investment in either individual stocks or a portfolio of stocks. The two stocks you are researching, Stock A and Stock B, have the following historical returns:

Year
2015 -15.00 % -7.00 %
2016 34.00 18.00
2017 28.00 -12.00
2018 -4.00 46.00
2019 24.00 22.00

  1. Calculate the average rate of return for each stock during the 5-year period. Do not round intermediate calculations. Round your answers to two decimal places.

    Stock A: %

    Stock B: %

  2. Suppose you had held a portfolio consisting of 50% of Stock A and 50% of Stock B. What would have been the realized rate of return on the portfolio in each year? What would have been the average return on the portfolio during this period? Do not round intermediate calculations. Round your answers to two decimal places. Negative values, if any, should be indicated by a minus sign.

    Year Portfolio
    2015 %
    2016 %
    2017 %
    2018 %
    2019 %
    Average return %

  3. Calculate the standard deviation of returns for each stock and for the portfolio. Do not round intermediate calculations. Round your answers to two decimal places.

    Portfolio
    Std. Dev. % % %

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of Finance

Authors: Scott Besley, Eugene F. Brigham

2nd Edition

003034509X, 9780030345098

More Books

Students also viewed these Finance questions