Intro

You've collected the following historical rates of return for stocks

A and B: Year

(t) rA,t rB,t

2016 0.02 0.03

2015 0.08 0.05

2014 0.18 0.07

Part 1

What was the average annual return for stock A 0.09333 Correct r A = r 1 + r 2 + r 3 3 = 0.02 + 0.08 + 0.18 3 = 0.0933

Part 2

What was the average annual return for stock B? 0.05 Correct r B = r 1 + r 2 + r 3 3 = 0.03 + 0.05 + 0.07 3 = 0.05

Part 3

What was the standard deviation of returns for stock A?