You have a portfolio consisting of $500,000 invested in the stock of firm A and $1,500,000 invested in the stock of firm B.
The returns for Firm A and Firm B are given below for the past five years:
Returns Returns
Year Firm A Firm B
1 0.12 0.06
2 0.15 0.14
3 0.04 0.07
4 (0.05) 0.00
5 0.09 0.13
The variance for the returns for Firm A were found to be 0.00615
The variance for the returns for Firm B were found to be 0.00325
a. Calculate the average return for each of these firms (A and B).
b. Calculate the Standard Deviation for each of these firms