Discussion:
Q: What are the standard deviations of the returns for stocks A and B? Suppose you want to use this history as a guide to making an investment decision for the long run. Based on this history, and assuming that standard deviation of return is the appropriate measure of risk, does it make any difference whether you invest wholly in stock A, wholly in stock B, or half in stock Aand half in stock B? Assume that average return is to be maximized and risk is to be minimized, if that is jointly possible.
Stocks A and B case study
