REALIZED RATES OF RETURN Stocks A and B have the following historical returns: Y

Question

REALIZED RATES OF RETURN Stocks A and B have the following historical returns: Year 2011 2012 2013 2014 2015 Stock A's Returns, rA -24.50% 32.75 13.75 - 3.50 25.00 Stock B's Returns, rB -12.80% 29.20 28.60 - 14.00 12.50 a. Calculate the average rate of return for stock A during the period 2011 through 2015. Round your answer to two decimal places Calculate the average rate of return for stock B during the period 2011 through 2015. Round your answer to two decimal places b. Assume that someone held a portfolio consisting of 50% of Stock A and 50% of Stock B. What would the realized rate of return on the portfolio have been each year? Round your answers to two decimal places. Enter a negative answer with a minus sign Year Portfolio 2011 2012 2013 2014 2015 What would the average return on the portfolio have been during this period? Round your answer to two decimal places

Explanation / Answer

Average returns can be calculated using AVERAGE formula in excel

Standard Deviation can be calculated using STDEV.S formula in excel

CV = Std. Dev. / Avg. return

A B Portfolio 2011 -24.50% -12.80% -18.65% 2012 32.75% 29.20% 30.98% 2013 13.75% 28.60% 21.18% 2014 -3.50% -14% -8.75% 2015 25% 12.50% 18.75% Avg. Return 8.70% 8.70% 8.70% Std. Dev. 23.03% 21.26% 21.24% CV 2.65 2.44 2.44

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