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Years rA rB Portfolio return 2006 -18% -14.50%...

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Years rA rB Portfolio return 2006 -18% -14.50% -16.25% 2007 33% 21.80% 27.40% 2008 15% 30.50% 22.75% 2009 -0.50% -7.60% -4.05% 2006 27% 26.30% 26.65% Average rate of return on the portfolio = 11.30% Co-efficient of variance = Standard deviation / Mean Standard deviation of Stk A = 20.79% Return of Stk A = 11.30% Co-efficient of variance (A) = 1.84 Standard deviation of Stk B = 20.78% Return of Stk B = 11.30% Co-efficient of variance (B) = 1.84 Standard deviation of Port = 20.13% Return of Portfolio = 11.30% Co-efficient of variance Port = 1.78 Assuming you are a risk-averse investor, would you prefer to hold Stock A, Stock B, or the portfolio ? why ?

 

Paper#10153 | Written in 18-Jul-2015

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