Question: Problem 1 (14 marks): Consider the following historical returns on two investments A and B. The average risk-free rate during the 2011-2015 period was equal

Problem 1 (14 marks): Consider the following historical returns on two investments A and B. The average risk-free rate during the 2011-2015 period was equal to 3%. Annual return (%) Year Investment A Investment B 2015 5% -5% -2% 2014 -20% 15% 2013 30% 20% 2012 40% 2011 5% 10% a) Calculate the average return and the risk premium for each investment. Which investment is likely to be is riskier? Explain. (6 marks) b) Calculate the standard deviation for each investment. (8 marks)

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