1. Stocks A and B have the following historical returns:

Year

Stock A returns

Stock B returns

2011

-18%

-14.5%

2012

33%

21.8%

2013

15%

15%

2014

-0.5%

-7.6%

2015

27%

26.3%

Instructions

1. Calculate the average rate of return for each stock during the period 2011 through 2015. (12 pts.)
2. Calculate the estimated standard deviation of the return for each stock. (12 pts.)
3. Calculate the coefficient of variation of each stock. (4 pts.)
4. If you are a risk averse investor, would you prefer to hold stock A or stock B and why? (2 pts.)