Year 2004 2005 2006 2007 2008 C. d. Stock A's Returns, ra (18.00%) 33.00 15.00 (0.50) 27.00 Stock B's Returns, B (14.50%) 21.80 30.50 (7.60) 26.30 Calculate the average rate of return for each stock during the period 2004 through 20 b. Assume that someone held a portfolio consisting of 50% of Stock A and 50% of Stoc What would the realized rate of return on the portfolio have been each year? Wh would the average return on the portfolio have been during this period? Calculate the standard deviation of returns for each stock and for the portfolio. 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 E the nortfolio? Why?
Year 2004 2005 2006 2007 2008 C. d. Stock A's Returns, ra (18.00%) 33.00 15.00 (0.50) 27.00 Stock B's Returns, B (14.50%) 21.80 30.50 (7.60) 26.30 Calculate the average rate of return for each stock during the period 2004 through 20 b. Assume that someone held a portfolio consisting of 50% of Stock A and 50% of Stoc What would the realized rate of return on the portfolio have been each year? Wh would the average return on the portfolio have been during this period? Calculate the standard deviation of returns for each stock and for the portfolio. 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 E the nortfolio? Why?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Transcribed Image Text:a.
b.
d.
e.
Year
2004
2005
2006
2007
2008
Stock A's Returns, ra
(18.00%)
33.00
15.00
(0.50)
27.00
Stock B's Returns, B
(14.50%)
21.80
30.50
(7.60)
26.30
Calculate the average rate of return for each stock during the period 2004 through 20
Assume that someone held a portfolio consisting of 50% of Stock A and 50% of Stock
What would the realized rate of return on the portfolio have been each year? Wha
would the average return on the portfolio have been during this period?
Calculate the standard deviation of returns for each stock and for the portfolio.
Calculate the coefficient of variation for each stock and for the portfolio.
Assuming you are a risk-averse investor, would you prefer to hold Stock A, Stock B
the portfolio? Why?
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