Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Stocks A and B have the following historical returns: Year Stock A's Returns, r A Stock B's Returns, r B 2016 -15.80 % -15.60 %

Stocks A and B have the following historical returns:

Year Stock A's Returns, rA Stock B's Returns, rB
2016 -15.80 % -15.60 %
2017 28.00 15.20
2018 14.75 35.40
2019 -5.50 -6.00
2020 33.50 25.95
  1. Calculate the average rate of return for each stock during the period 2016 through 2020. Round your answers to two decimal places.

    Stock A: %

    Stock B: %

  2. Assume that someone held a portfolio consisting of 50% of Stock A and 50% of Stock B. What would the realized rate of return on the portfolio have been each year? Round your answers to two decimal places. Negative values should be indicated by a minus sign.

    Year Portfolio
    2016 %
    2017 %
    2018 %
    2019 %
    2020 %

    What would the average return on the portfolio have been during this period? Round your answer to two decimal places.

    %

  3. Calculate the standard deviation of returns for each stock and for the portfolio. Round your answers to two decimal places.

    Stock A Stock B Portfolio
    Standard Deviation % % %

  4. Calculate the coefficient of variation for each stock and for the portfolio. Round your answers to two decimal places.

    Stock A Stock B Portfolio
    CV

  5. Assuming you are a risk-averse investor, would you prefer to hold Stock A, Stock B, or the portfolio?

    -Select-Stock AStock BPortfolio

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Understanding ETF Options Profitable Strategies For Diversified Low Risk Investing

Authors: Kenneth R. Trester

1st Edition

007176030X, 0071760431, 9780071760430

More Books

Students also viewed these Finance questions

Question

Whenever people face risk, they will seek insurance. True or false?

Answered: 1 week ago