Calculate the average rate of return for each stock

Assignment Help Finance Basics

Reference no: EM13290460

Stocks M and W have the following historical returns:

Year Stock M Stock W
2006 -18% -14.50%
2007 33% 21.80%
2008 15% 30.50%
2009 -0.50% -7.60%
2010 27% 26.30%

a. Calculate the average rate of return for each stock during the 5-year period.
b. Assume that you are planning to hold a portfolio consisting of 50% of Stock M and 50% of Stock W. What is the realized rate of return on the portfolio in each year?
c. What is the average return on the portfolio for the 5 year period?
d. What is the standard deviation of returns for each stock and for the portfolio?
e. Calculate the coefficient of variation for each stock and for the portfolio?
f. If you are a risk averse investor, assuming these are your only choices, would you prefer to hold Stock M, Stock W, or the portfolio? Why?

Reference no: EM13290460

Questions Cloud

Find the electric field intensity between the conductors : the inner conductor has a radius of a=2cm theradius of the outer conductor is 4cm, and the length of thecylinder is l=6cm. assuming no field fringing and free spacebetween the conductors and neglecting fringing, findA.the electric field intensity ..

What is the firm weighted average cost of capital : The bonds are selling at 98 percent of face value. The company's tax rate is 34 percent. What is the firm's weighted average cost of capital?

What uniform surface charge density would be required : A uniform electric field of about 100 V/m pointing straight down, exists just above Earth's surface. what uniform surface charge density would be required

Explain the formation of the the double bond : how do you go from cyclopentane to 2 chloro cyclopentanol. specifically the formation of the the double bond

Calculate the average rate of return for each stock : Assume that you are planning to hold a portfolio consisting of 50% of Stock M and 50% of Stock W. What is the realized rate of return on the portfolio in each year?

Find the bandwidths of the original and modified pulses : The transform of the Gaussian pulse g(t) = exp(-πt2) is exp(-π f2). Find thetransform of the modified pulse g(t)= exp(-100πt2). b) Find the bandwidths of the original and modifiedpulses using G(fBW)= .707 G(0). (Hint you have to usethe natural log..

Explain at what ph will precipitation of al(oh)3 begin : At what pH will precipitation of Al(OH)3 begin if 5.40 lb of aluminum sulfate, Al2(SO4)3, is added to 1150 gallons of water (with a negligible change in volume)

Find the tension in the lower rope : Two blocks with masses M_1 and M_2 hang one under the other. For this problem, take the positive direction to be upward, find the tension in the lower rope

How many orders does the company place per year : How many orders does the company place per year? Assume that it is Monday morning before the store opens, and a shipment of suits has just arrived. When will Sache place its next order?

User Account

All Pages