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Year 2012 Historical Realized Rates of Return Stocks A and B have the following historical returns: FB -12.40% FA -16.70% 2013 38.75 25.30 2014

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Year 2012 Historical Realized Rates of Return Stocks A and B have the following historical returns: FB -12.40% FA -16.70% 2013 38.75 25.30 2014 14.75 28.00 2015 -4.50 -8.90 2016 26.50 26.80 a. Calculate the average rate of return for each stock during the 5-year period. Round your answers to two decimal places. Stock A Stock B % % b. Assume that someone held a portfolio consisting of 50% of Stock A and 50% of Stock B. What would have been the realized rate of return on the portfolio in each year? What would have been the average return on the portfolio during this period? Round your answers to two decimal places. Year 2012 Portfolio % 2013 % 2014 % 2015 % 2016 % Year Portfolio 2012 % % 2013 % 2014 2015 2016 Average return % % % c. Calculate the standard deviation of returns for each stock and for the portfolio. Round your answers to two decimal places. Std. Dev. % % B Portfolio % d. If you are a risk-averse investor then, assuming these are your only choices, would you prefer to hold Stock A, Stock B, or the portfolio? -Select- o

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