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Stock A and Stock B have the following historical returns: 16-3 Stock A Stock B Year 2004 14.5% -18.0% -21.8% 2005 33.0% 2006 15.0% 29.5%

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Stock A and Stock B have the following historical returns: 16-3 Stock A Stock B Year 2004 14.5% -18.0% -21.8% 2005 33.0% 2006 15.0% 29.5% 2007 -0.5% 7.6% 27.0% 2008 26.3% Calculate the average rate of return for each stock during this period. b. Assume that someone held a portfolio consisting of 50 percent Stock A and 50 percent Stock B. What would have been the realized rate ofretum on the portfolio for each year? What would have the realized rate ofretun been over the period? Using a spread sheet, calculate the standard deviation (o) for each stock and the portfolio d. Calculate the coefficient of variation for each stock and the portfolio e. If you are a risk averse investor, would you prefer Stock A, Stock B or the portfolio? a. C

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