1. **Problem Statement:** Calculate the average rate of return for Stock B during the period 1994 through 1998. 2. **Data:** Returns for Stock B by year are: 1994: 114.5050%, 1995: 21.80%, 1996: 30.50%, 1997: -7.60%, 1998: 26.30%. 3. **Formula for Average Return:** The average return $\bar{r}$ over $n$ years is given by $$\bar{r} = \frac{1}{n} \sum_{i=1}^n r_i$$ where $r_i$ is the return in year $i$. 4. **Calculation:** $$\bar{r} = \frac{114.5050 + 21.80 + 30.50 + (-7.60) + 26.30}{5}$$ $$= \frac{185.505}{5} = 37.101\%$$ 5. **Interpretation:** The average annual return for Stock B over the 5-year period is approximately 37.10%. 6. **Next Step (if needed):** To calculate the standard deviation of returns for Stock B, use the formula: $$\sigma = \sqrt{\frac{1}{n-1} \sum_{i=1}^n (r_i - \bar{r})^2}$$ 7. **Standard Deviation Calculation:** Calculate each squared deviation: - $(114.5050 - 37.101)^2 = 5993.02$ - $(21.80 - 37.101)^2 = 234.99$ - $(30.50 - 37.101)^2 = 43.23$ - $(-7.60 - 37.101)^2 = 2010.44$ - $(26.30 - 37.101)^2 = 116.04$ Sum of squared deviations: $$5993.02 + 234.99 + 43.23 + 2010.44 + 116.04 = 8397.72$$ Divide by $n-1=4$: $$\frac{8397.72}{4} = 2099.43$$ Standard deviation: $$\sigma = \sqrt{2099.43} \approx 45.82\%$$ 8. **Final Answer:** - Average return for Stock B (1994-1998): **37.10%** - Standard deviation of returns for Stock B: **45.82%** This high standard deviation indicates that Stock B's returns were quite volatile during this period.