Question: QUESTION 4 (25 Marks) You are tasked with analysing the historical performance of two shares, Share A and Share B, over a 6-year period. Below
QUESTION 4 (25 Marks) You are tasked with analysing the historical performance of two shares, Share A and Share B, over a 6-year period. Below is a table of annual returns for each share. Year Share A Return (%) Share B Return (%) 1 10% 12% 2 8% 9% 3 -5% -4% 4 15% 18% 5 -2% 0% 6 12% 14% Required: 4.1 Calculate the average annual return and standard deviation of returns for both Share A and Share B. (16 marks) 4.2 Explain the concept of standard deviation in the context of risk and return analysis. (4 marks) 4.3 Based on your calculations and understanding of risk and return, which of the two shares, Share A or Share B, is more volatile over the 6-year period? Provide a rationale for your answer.
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