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Calculate the average rate of return and the realized rate of return on the portfolio.

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Year Stock A's Returns (rA) Stock B's Returns (rB)
2000 -18% 14.5
2001 33 21.8
2002 15 30.5
2003 -0.5 -7.6
2004 27 26.3

1.Calculate the average rate of return.

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

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