Calculate average rate of return for each stock for 5 years

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Reference no: EM133346022

Question: Cahya Permana is a businessman who is interested in investing in stocks. He is hesitant to invest in individual stocks or a portfolio of stocks. Cahya then learned more about Stock X and Stock Y which have historical returns as follows:

YEAR	rX	rY
2016	(20%)	(5%)
2017	42%	15%
2018	20%	(13%)
2019	(8%)	50%
2020	25%	12%

Based on this information, answer the following questions.
a. Calculate the average rate of return for each stock for 5 years!
b. If Cahya has a stock portfolio consisting of Stock X and Stock Y with a portion of 50% each, what is the value of the realized rate of return from the portfolio each year? Also calculate the average return on the portfolio in that period!
c. You are asked to provide recommendations for stock options that are the least risky for Cahya. Would you recommend Stock X, Stock am Y, or a portfolio of stocks? Explain your argument!

Reference no: EM133346022

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