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You are considering an investment in either individual stocks or a portfolio of stocks. The two stocks you are researching, Stock A and Stock B,

You are considering an investment in either individual stocks or a portfolio of stocks. The two stocks you are researching, Stock A and Stock B, have the following historical returns:

  1. Year2015-19.00%-10.00%201643.0021.00201725.00-14.002018-4.0049.00201933.0032.00Calculate the average rate of return for each stock during the 5-year period. Do not round intermediate calculations. Round your answers to two decimal places.
  2. Stock A:%
  3. Stock B:%
  4. Suppose you had 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? Do not round intermediate calculations. Round your answers to two decimal places. Negative values, if any, should be indicated by a minus sign.
  5. YearPortfolio2015%2016%2017%2018%2019%Average return%
  6. Calculate the standard deviation of returns for each stock and for the portfolio. Do not round intermediate calculations. Round your answers to two decimal places.
  7. PortfolioStd. Dev.%%%
  8. Suppose you are a risk-averse investor. Assuming Stocks A and B are your only choices, would you prefer to hold Stock A, Stock B, or the portfolio? Why?
  9. A risk-averse investor should choose-Select-
  10. Stock A
  11. Stock B
  12. Portfolio
  13. Item 12
  14. , since it offers-Select-
  15. less
  16. higher
  17. the same
  18. Item 13
  19. expected return with-Select-
  20. less
  21. higher
  22. the same
  23. Item 14
  24. risk.

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