You are looking at two investments with the following historical returns:

Year 1 2 3 4 5

Stock A 10% 7% 15% -5% 8%

Stock B 6% 2% 5% 1% -2%

Required:

a) Calculate the arithmetic average return and standard deviation for both investments. (6 marks)

b) If you invest $21,000 in Stock A and $9,000 in Stock B, what is the expected return on your portfolio? (3 marks)