QUESTION 6

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 A B

2014. -21% -6.0%

2015 38.0% 17.0%

2016 20% -13.0%

2017 -9.0% 40.0%

2018 20.0% 11.0%

Suppose you had held a portfolio consisting of 20% Stock A and 80% Stock B.

Calculate the standard deviation of returns for each stock and for the portfolio.

	a.	0.351, 0.420, 0.225
	b.	0.452, 0.321, 0.298
	c.	0.240, 0.208, 0.171
	d.	0.280,0.249, 0.275