Stocks A and B have the following annual realized returns:

Year Stock A Stock B

2013 20% 30%

2014 5% 7%

2015 -5% -3%

2016 2% -8%

2017 7% 25%

a) What are the average realized returns of the two stocks?

b) What are the standard deviations of the returns of the two stocks? show your hand-calculation procedure.

c) What is the average return and standard deviation of the returns for a portfolio of 60% stock A and 40% stock B? (correlation coefficient between returns of A and B is 0.8355.)