Problem 6-13 Historical Realized Rates of Return Stocks A and B have the following historical returns: Year 2012 -18.30% -15.70% 2013 34.50 24.80 2014 15.00 26.00 2015 -4.25 -12.10 2016 32.25 36.20 Calculate the...

60.1K

Verified Solution

Question

Finance

Problem 6-13
Historical Realized Rates of Return
Stocks A and B have the following historical returns:
Year
2012 -18.30% -15.70%
2013 34.50 24.80
2014 15.00 26.00
2015 -4.25 -12.10
2016 32.25 36.20
Calculate the average rate of return for each stock during the5-year period. Round your answers to two decimal places.
Stock A %
Stock B %
Assume that someone held a portfolio consisting of 50% of StockA and 50% of Stock B. What would have been the realized rate ofreturn on the portfolio in each year? What would have been theaverage return on the portfolio during this period? Round youranswers to two decimal places.
Year Portfolio
2012 %
2013 %
2014 %
2015 %
2016 %
Average return %
Calculate the standard deviation of returns for each stock andfor the portfolio. Round your answers to two decimal places.
r_A r_B Portfolio
Std. Dev. % % %
If you are a risk-averse investor then, assuming these are youronly choices, would you prefer to hold Stock A, Stock B, or theportfolio?

-Select-Stock AStock BPortfolio

Answer & Explanation Solved by verified expert

3.8 Ratings (651 Votes)

See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

Problem 6-13Historical Realized Rates of ReturnStocks A and B have the following historical returns:Year2012-18.30%-15.70%201334.5024.80201415.0026.002015-4.25-12.10201632.2536.20Calculate the average rate of return for each stock during the5-year period. Round your answers to two decimal places.Stock A%Stock B%Assume that someone held a portfolio consisting of 50% of StockA and 50% of Stock B. What would have been the realized rate ofreturn on the portfolio in each year? What would have been theaverage return on the portfolio during this period? Round youranswers to two decimal places.YearPortfolio2012%2013%2014%2015%2016%Average return%Calculate the standard deviation of returns for each stock andfor the portfolio. Round your answers to two decimal places.rArBPortfolioStd. Dev.%%%If you are a risk-averse investor then, assuming these are youronly choices, would you prefer to hold Stock A, Stock B, or theportfolio?-Select-Stock AStock BPortfolio

	r_A	r_B	Portfolio
Std. Dev.	%	%	%

Year
2012	-18.30%	-15.70%
2013	34.50	24.80
2014	15.00	26.00
2015	-4.25	-12.10
2016	32.25	36.20