Calculate the average rate of return
Course:- Finance Basics
Reference No.:- EM1360805

Assignment Help
Expertsmind Rated 4.9 / 5 based on 47215 reviews.
Review Site
Assignment Help >> Finance Basics

Realized rates of return

Stocks A and B have the following historical returns:
Year Stock A's Returns, rA Stock B's Returns, rB
2001 (18.00%) (14.50%)
2002 33.00 21.80
2003 15.00 30.50
2004 (0.50) (7.60)
2005 27.00 26.30

a. Calculate the average rate of return for each stock during the period 2001 through 2005.

b. Assume that someone held a portfolio consisting of 50 percent of Stock A and 50 percent of Stock B. What would the realized rate of return on the portfolio have been in each year? What would the average return on the portfolio have been during this period?

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


Put your comment

Ask Question & Get Answers from Experts
Browse some more (Finance Basics) Materials
Assume that the inlet and outlet are at the same depth. Which will produce more thrust per horsepower, a low-volume, high-pressure pump or a high-volume, low pressure pump?
a. Use a spreadsheet (or a calculator with a linear regression function) to determine Stock X's beta coefficient.b. Determine the arithmetic average rates of return for Stock
In international cash management, managers have choice between managing only foreign exchange risk or managing foreign exchange and interest rate risk together.
What implications do these changes have for employee motivation and involvement in organization? What lessons must people seeking jobs learn from experiences of these employee
If you find that equity beta is different between Frim A and its comparable firm in (a), how would you explain the difference? If you expect no difference explain why they a
Here are many assertions about typical corporate dividend policies. Which of them are true? Write out a corrected version of any false statements.
In order to sustain its operations and thus generate sales and cash flows in the future, the firm was required to make $1,250 of capital expenditures on new fixed assets and
Explain why an increase in the money supply can affect interest rates in different ways.-  Include the potential impact of the money supply on the supply of and the demand f