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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:
a Calculate the average rate of return for each stock during the year period. Do not round intermediate calculations. Round your answers to two decimal places.
Stock A:
Stock B:
calculations. Round your answers to two decimal places. Negative values, if any, should be indicated by a minus sign.
c 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.
d Suppose you are a riskaverse investor. Assuming Stocks A and B are your only choices, would you prefer to hold Stock A Stock B or the portfolio? Why?
A riskaverse investor should choose Select since it offers Select expected return with Select risk.
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