Computing average rate of return

Assignment Help Finance Basics

Reference no: EM1365046

Stock A and B have the following historical returns:

YEAR STOCK A'S RETURNS STOCK B'S RETURNS
1998 (18.00%) (14.50%)
1999 33.00% 21.80%
2000 15.00% 30.50%
2001 (0.50%) (7.60%)
2002 27.00% 26.30%

a)Calculate the average rate of return for each stock during the period 1998 through 2002.
b)Assume that an investor held a portfolio consisting of 35% of Stock A and 65% of Stock B. What would be i) the average return of the portfolio, and ii) the beta of the portfolio in each year, during the period 1998 through 2002?
c)Calculate the standard deviation of returns for each stock and for the portfolio.
d)Calculate the coefficient of variation for each stock and for the portfolio.
e)If you are a risk-averse investor, would you prefer to hold Stock A, Stock B, or the portfolio?

Reference no: EM1365046

Questions Cloud

Impact of cost of health care on economy : Discuss your understanding of the impact the cost of health care has on the economy. Include a discussion on the Gross Domestic Product (GDP).

Substantial amount of revenue-benefit from budgeting : Explain how both small and large organizations can benefit from budgeting. Explain why a company can show it has a substantial amount of revenue and yet not able to pay its current liabilities?

Explain what information should the proposed system : Explain What information should the proposed system exchange between the retail stores and headquarters

Principals of management : decisions today likely to be programmed or non-programmed? Explain your answer with appropriate examples.

Computing average rate of return : Stock A and Stock B have the following historical returns: Compute the average rate of return for each stock during the period 1998 through 2002.

Distribution centers relocating to second tier cities : Distribution centers relocating to second tier cities - Explain the reasons many distribution centers are relocating to second tier interior cities.

Accounting information system replacement : Analyze the need for changing to a new system and the potential benefits and risks associated with this change. Identify three (3) advantages and three (3) disadvantages for each of the following choices:

Cost of prescription medications : How do you feel direct marketing affects the cost of prescription medications?

Write recursive version of array-based linear search : Write an algorithm but not code. Write a recursive version of the array-based linear search algorithm. Write a recursive version of the linked-list-based linear search algorithm."""

User Account

All Pages