A and B have the following historical returns: Year 2004: -16.80% (stock A\'s Re

Question

A and B have the following historical returns:


Year 2004: -16.80% (stock A's Returns) , -12.20% (stock B's return)
Year 2005: 36.75 % (stock A's return), 21.70 (stock B's return)
Year 2006:18.75 (Stock A's return), 23.90 (stock B's return)
Year 2007: -3.75 (stock A's return), -12.80 (Stock B's return)
Year 2008: 26.00(Stock A's Return), 26.40 (stock B's return)

a. Calculate the average rate of return for stock A during the period 2004 through 2008. Round your answer to two decimal places.
_________________ %

b. Calculate the average rate of return for stock B during the period 2004 through 2008. Round your answer to two decimal places.
_____________________ %



*please show how to derive answer, thanks!

Explanation / Answer

Take all five values and add them together divide by the number of years. The first five for A together are 60.95/5 = 12.19% The second five for B are 47/5 = 9.4%

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