Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Stocks A and B have the following historical returns:
| Year | Stock A's Returns, rA | Stock B's Returns, rB | ||
| 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?
Transcribed Image Text: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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