Stocks A and B have the following historical returns:YearStock A's Returns, rAStock B's Returns, rB2016(21.10%)(14.70%)201723.50 28.50 201813.00 29.90 2019(4.25)(10.40)202027.75 5.60 Calculate the average rate of return for each stock during the period 2016 through 2020. Round your answers to two decimal places.Stock A: %Stock 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. Negative values should be indicated by a minus sign. YearPortfolio2016 %2017 %2018 %2019 %2020 % What would the average return on the portfolio have been during this period? Round your answer to two decimal places. %Calculate the standard deviation of returns for each stock and for the portfolio. Round your answers to two decimal places. Stock AStock BPortfolioStandard Deviation % % % Calculate the coefficient of variation for each stock and for the portfolio. Round your answers to two decimal places. Stock AStock BPortfolioCV Assuming you are a risk-averse investor, would you prefer to hold Stock A, Stock B, or the portfolio? AttemptsKeep the Highest / 92. Problem 8.20 (Realized Rates of Return)盟eBookStocks A and B have the following historical returns:a. Calculate the average rate of return for each stock during the period 2016 through 2020. Round your answers to two decimal places.Stock A:%%What would the average return on the portfolio have been during this period? Round your answer to two decimal places.Stock B: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. Negative values should be indicated by a minus sign.Portfolio%c. Calculate the standard deviation of returns for each stock and for the portfolio. Round your answers to two decimal places.Stock B%Standard Deviation%%d. Calculate the coefficient of variation for each stock and for the portfolio. Round your answers to two decimal places.Stock AStock BPortfolioCVStock APortfolioYear20162017201820192020e. Assuming you are a risk-averse investor, would you prefer to hold Stock A, Stock B, or the portfolio?Stock A ✔Stock A's Returns, ra(21.10%)23.5013.00(4.25)27.75Stock B's Returns, rg(14.70%)28.5029.90(10.40)5.60Year20162017201820192020%%%%%

Portfolio rate of return Rate of return of a portfolio is the weighted average rate of return of all…

Answered: Stocks A and B have the following…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter2: Risk And Return: Part I

Section: Chapter Questions

Problem 13P

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Question

Stocks A and B have the following historical returns:

Year	Stock A's Returns, r_A	Stock B's Returns, r_B
2016	(21.10	%)	(14.70	%)
2017	23.50		28.50
2018	13.00		29.90
2019	(4.25	)	(10.40	)
2020	27.75		5.60

Calculate the average rate of return for each stock during the period 2016 through 2020. Round your answers to two decimal places.
Stock A: %

Stock 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. Negative values should be indicated by a minus sign.

Year Portfolio

2016   %

2017   %

2018   %

2019   %

2020   %

What would the average return on the portfolio have been during this period? Round your answer to two decimal places.

  %
Calculate the standard deviation of returns for each stock and for the portfolio. Round your answers to two decimal places.

Stock A Stock B Portfolio

Standard Deviation % % %
Calculate the coefficient of variation for each stock and for the portfolio. Round your answers to two decimal places.

Stock A Stock B Portfolio

CV
Assuming you are a risk-averse investor, would you prefer to hold Stock A, Stock B, or the portfolio?

Attempts
Keep the Highest / 9
2. Problem 8.20 (Realized Rates of Return)
盟
eBook
Stocks A and B have the following historical returns:
a. Calculate the average rate of return for each stock during the period 2016 through 2020. Round your answers to two decimal places.
Stock A:
%
%
What would the average return on the portfolio have been during this period? Round your answer to two decimal places.
Stock B:
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. Negative values should be indicated by a minus sign.
Portfolio
%
c. Calculate the standard deviation of returns for each stock and for the portfolio. Round your answers to two decimal places.
Stock B
%
Standard Deviation
%
%
d. Calculate the coefficient of variation for each stock and for the portfolio. Round your answers to two decimal places.
Stock A
Stock B
Portfolio
CV
Stock A
Portfolio
Year
2016
2017
2018
2019
2020
e. Assuming you are a risk-averse investor, would you prefer to hold Stock A, Stock B, or the portfolio?
Stock A ✔
Stock A's Returns, ra
(21.10%)
23.50
13.00
(4.25)
27.75
Stock B's Returns, rg
(14.70%)
28.50
29.90
(10.40)
5.60
Year
2016
2017
2018
2019
2020
%
%
%
%
%

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	Stock A	Stock B	Portfolio
Standard Deviation	%	%	%

	Stock A	Stock B	Portfolio
CV