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Calculate the average rate of return

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Reference no: EM132932881

Stocks A and B have the following historical returns:YearE(A)E(B)2011-19.00%-17.50%201231.0023.80201311.0033.752014

-0.75

-8.35

2015

31.00

29.30

i. Calculate the average rate of return for each stock during the period 2011 through 2015.

ii. Assume that someone held a portfolio consisting of 60% stock A and 40% of stock B. What would the average rate of return on the portfolio have been during this period?

iii. Which one is more risky? Stock A or Stock B or the portfolio?

iv. Assuming you are a risk-averse investor, which one you would choose for investment.

Reference no: EM132932881

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