average deviation

1. What happens if you compute the average deviation from the mean, rather than the average squared deviation from the mean?
2. Asset A from Table 8.1 offers -1%, +2%, +4%, and +11% with equal probabilities. Now add 5% to each of these returns. This new asset offers +4%, +7%, +9%, and +16%. Compute the expected rate of return, the variance, and the standard deviation of this new asset. How does it compare to A?