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Worldwide Widget Manufacturing, Inc., has decided to invest in some stock. As CFO, you ve been asked to review the portfolio. First, you ll need

Worldwide Widget Manufacturing, Inc., has decided to invest in some stock. As CFO, youve been asked to review the portfolio. First, youll need to measure the past performance of the investments. Then, measure the past returns risk of the investment. Lastly, calculate the average return and risk of the portfolio.
The following table shows the annual returns for Company A and Company B, which are part of the investment portfolio youre interested in.
Company A Company B
Year 15.23%13.51%
Year 28.919.35
Year 37.322.44
Year 415.813.12
Year 58.3214.81
Year 625.9818.36
Whats the average return and standard deviation of returns for these two companies? Whats the average return and standard deviation of returns for the portfolio? Whats the average return of a portfolio consisting of 60 percent of Company A and 40 percent of Company B?

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