Average return and standard deviation of returns

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Worldwide Widget Manufacturing, Inc., has decided to invest in some stock. As CFO, you've been asked to review the portfolio. First, you'll need to measure the past performance of the investments. Then, measure the past return's risk of the investment. Lastly, calculate the average return and risk of the portfolio.

The following table shows the annual returns for Company A and Company B, which are part of the investment portfolio you're interested in. 

Company A Company B

Year 1 5.23% 13.51%

Year 2 8.91 -9.35

Year 3 7.32 2.44

Year 4 -15.81 3.12

Year 5 -8.32 14.81

Year 6 25.98 18.36

What's the average return and standard deviation of returns for these two companies? What's the average return and standard deviation of returns for the portfolio? What's the average return of a portfolio consisting of 60 percent of Company A and 40 percent of Company B?

Reference no: EM132370349

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