Consider the following returns for two investments, A and B, over the past four years:
Investment 1: 2% 8% -4% 6% Investment 2: 6% 12% -8% 10%
a. Calculate the mean for each investment.
b. Which investment provides a higher return?
c. Calculate the standard deviation for each investment.
d. Which investment provides less risk?
e. Given a risk-free rate of 1.2%, calculate the Sharpe ratio for each investment.
f. Which investment has performed better?
