Stocks A and B have the following historical returns: a. Calculate the average rate of return for
Question:
Stocks A and B have the following historical returns:
a. Calculate the average rate of return for each stock during the period 2004 through 2008.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? What would the average return on the portfolio have been during this period?c. Calculate the standard deviation of returns for each stock and for the portfolio.d. Calculate the coefficient of variation for each stock and for the portfolio.e. Assuming you are a risk-averse investor, would you prefer to hold Stock A, Stock B, or the portfolio?Why?
PortfolioA portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...
Step by Step Answer:
The answers to a b c and d are given in table belo...View the full answer
Fundamentals of Financial Management
ISBN: 978-0324664553
Concise 6th Edition
Authors: Eugene F. Brigham, Joel F. Houston
