5. Calculating Average Returns (LO1, CFA1) The rates of return on Cherry Jalopies, Inc., stock over the last five years were 17 percent, 11 percent, -2 percent, 3 percent, and 14 percent. Over the same period, the returns on Straw Construction Company's stock were 16 percent, 18 percent, -6 percent, 1 percent, and 22 percent. What was the arithmetic average return on each stock over this period? 6. Calculating Variability (LO4, CFA4) Using the information from Problem 5, calculate the variances and the standard deviations for Cherry and Straw.
5. Calculating Average Returns (LO1, CFA1) The rates of return on Cherry Jalopies, Inc., stock over the last five years were 17 percent, 11 percent, -2 percent, 3 percent, and 14 percent. Over the same period, the returns on Straw Construction Company's stock were 16 percent, 18 percent, -6 percent, 1 percent, and 22 percent. What was the arithmetic average return on each stock over this period? 6. Calculating Variability (LO4, CFA4) Using the information from Problem 5, calculate the variances and the standard deviations for Cherry and Straw.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Financial Ratios
A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.
Return on Equity
The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.
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Transcribed Image Text:5. Calculating Average Returns (LO1, CFA1) The rates of return on Cherry Jalopies, Inc., stock over the last
five years were 17 percent, 11 percent, -2 percent, 3 percent, and 14 percent. Over the same period, the
returns on Straw Construction Company's stock were 16 percent, 18 percent, -6 percent, 1 percent, and 22
percent. What was the arithmetic average return on each stock over this period?
6. Calculating Variability (LO4, CFA4) Using the information from Problem 5, calculate the variances and the
standard deviations for Cherry and Straw.
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