1. Compute the arithmetic mean annual rate of return for each stock. Which stock is most desirable by this measure? 2. Compute the standard deviation of the annual rate of return for each stock. By this measure, which is the preferable stock? 3. Compute the coefficient of variation for each stock. By this relative measure of risk, which stock is preferable?
1. Compute the arithmetic mean annual rate of return for each stock. Which stock is most desirable by this measure? 2. Compute the standard deviation of the annual rate of return for each stock. By this measure, which is the preferable stock? 3. Compute the coefficient of variation for each stock. By this relative measure of risk, which stock is preferable?
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
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During the past 5 years, you owned 2 stocks that had the following annual rates of return.
Year
1
2
3
4
5
Stock T
0.19
0.08
-0.12
-.030
0.15
Stock B
0.08
0.03
-0.09
0.02
0.04
1. Compute the arithmetic mean annual rate of return for each stock. Which stock is most
desirable by this measure?
2.
Compute the standard deviation of the annual rate of return for each stock. By this
measure, which is the preferable stock?
3. Compute the coefficient of variation for each stock. By this relative measure of risk,
which stock is preferable?
4. Compute the geometric mean rate of return for each stock.
5. Discuss the difference between the arithmetic mean return and the geometric mean
return of each stock. Relate the differences in the mean returns to the standards
deviation of the return for each stock.
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