What was the average return for the stock over the period of 1990 through 2010?, Accounting homework help

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The Allied Group has acquired Kramer Industries and is now considering additional investments. They have determined that there is a firm that is a good fit for their portfolio, the Kramer firm of Montana. The firm was established in 1990 and has the following historical returns:

Kramer Industries
Year Earnings

1990

 (8% Loss)

1995

 23%

2000

 26%

2005

 31%

2010

 18%


  • What was the average return for the stock over the period of 1990 through 2010?
  • What was the standard deviation for the stock over this period?
  • Assume that you currently have a portfolio that returns 19.5%. If you add this stock to the current portfolio, what would happen to the average return on the portfolio?
  • Should Allied invest in the stock? Justify your response.

 
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