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Stocks A and B have the following annual realized returns: Stock B Year 2013 2014 Stock A 20% 30% 7% 5% -5% 2015 -3% 2016

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Stocks A and B have the following annual realized returns: Stock B Year 2013 2014 Stock A 20% 30% 7% 5% -5% 2015 -3% 2016 2017 2% -8% 7% 25% a) What are the average realized retums of the two stocks? (1 point) b) What are the standard deviations of the returns of the two stocks? Don't use pre-set st.dev. functions in your calculators/computers to get the answers. Please show your hand-calculation procedure. (2 points) c) What is the average return and standard deviation of the returns for a portfolio of 60% stock A and 40% stock B? (Hint: correlation coefficient between returns of A and B is 0.8355.) (1 point)

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