Stocks A and B have the following historical returns: Year 2011 2012 2013 2014 2

Question

Stocks A and B have the following historical returns: Year 2011 2012 2013 2014 2015 Stock A's Returns, rA 18.00% 21.00 12.50 - 3.75 31.75 Stock B's Returns, rB 17.70% 19.50 20.90 - 7.50 28.30 a. Calculate the average rate of return for stock A during the period 2011 through 2015. Round your answer to two decimal places 8.70 Calculate the average rate of return for stock B during the period 2011 through 2015. Round your answer to two decimal places 8.70 b. Assume that someone held a portfolio consisting of 50% of Stock A and 50% of Stock B. What would the realized rate of return on the portfolio have been each year? Round your answers to two decimal places. Enter a negative answer with a minus sign Year Portfolio 2011 17.85 2012 20.25

Explanation / Answer

prefer portfolio

A B Port -18.00% -17.70% -17.85% 21.00% 19.50% 20.25% 12.50% 20.90% 16.70% -3.75% -7.50% -5.63% 31.75% 28.30% 30.03% average 8.70% 8.70% 8.70% std dev 19.7796% 20.0564% 19.7628% coeff of Var 2.2735 2.3053 2.2716

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