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Problem 6-13 Historical Realized Rates of Return Stocks A and B have the following historical returns: Year TA TB 2012 -22.70% -15.70% 2013 37.00 20.20

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Problem 6-13 Historical Realized Rates of Return Stocks A and B have the following historical returns: Year TA TB 2012 -22.70% -15.70% 2013 37.00 20.20 2014 18.25 32.90 2015 -3.75 -8.90 2016 34.75 35.05 a. Calculate the average rate of return for each stock during the 5-year period. Round your answers to two decimal places. Stock A % Stock B b. Assume that someone 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? Round your answers to two decimal places. Year Portfolio 2012 2013 2014 2015 2016 Average return c. Calculate the standard deviation of returns for each stock and for the portfolio. Round your answers to two decimal places. rB Portfolio TA Std. Dev. %

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