During the past five years, you owned two stocks that had the following annual rates of return: a. Compute the arithmetic mean annual rate of return for each stock. Round your answers to one decimal place. Stock T: % % Stock B: Stock B: Which stock is most desirable by this measure? -Select- is more desirable because the arithmetic mean annual rate of return is -Select- . b. Compute the standard deviation of the annual rate of return for each stock. (Use Chapter 1 Appendix if necessary.) Do not round intermediate calculations. Round your answers to three decimal places. Answer with the population standard deviation. Stock T: % % By this measure, which is the preferable stock? -Select- is the preferable stock. Year 1 2 3 4 5 Stock T 0.16 0.05 -0.15 -0.06 0.15 Stock B: By this relative measure of risk, which stock is preferable? -Select- is the preferable stock. Stock B: Stock B 0.10 0.02 -0.10 0.04 0.02 c. Compute the coefficient of variation for each stock. (Use the Chapter 1 Appendix if necessary.) Do not round intermediate calculations. Round your answers to four decima places. Use the population standard deviation in your computation. Stock T: % d. Compute the geometric mean rate of return for each stock. Round your answers to three decimal places. Stock T: %
During the past five years, you owned two stocks that had the following annual rates of return: a. Compute the arithmetic mean annual rate of return for each stock. Round your answers to one decimal place. Stock T: % % Stock B: Stock B: Which stock is most desirable by this measure? -Select- is more desirable because the arithmetic mean annual rate of return is -Select- . b. Compute the standard deviation of the annual rate of return for each stock. (Use Chapter 1 Appendix if necessary.) Do not round intermediate calculations. Round your answers to three decimal places. Answer with the population standard deviation. Stock T: % % By this measure, which is the preferable stock? -Select- is the preferable stock. Year 1 2 3 4 5 Stock T 0.16 0.05 -0.15 -0.06 0.15 Stock B: By this relative measure of risk, which stock is preferable? -Select- is the preferable stock. Stock B: Stock B 0.10 0.02 -0.10 0.04 0.02 c. Compute the coefficient of variation for each stock. (Use the Chapter 1 Appendix if necessary.) Do not round intermediate calculations. Round your answers to four decima places. Use the population standard deviation in your computation. Stock T: % d. Compute the geometric mean rate of return for each stock. Round your answers to three decimal places. Stock T: %
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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Transcribed Image Text:During the past five years, you owned two stocks that had the following annual rates of return:
Stock B:
a. Compute the arithmetic mean annual rate of return for each stock. Round your answers to one decimal place.
Stock T:
%
Stock B:
%
Which stock is most desirable by this measure?
-Select- is more desirable because the arithmetic mean annual rate of return is -Select- C
b. Compute the standard deviation of the annual rate of return for each stock. (Use Chapter 1 Appendix if necessary.) Do not round intermediate calculations. Round your
answers to three decimal places. Answer with the population standard deviation.
Stock T:
%
By this measure, which is the preferable stock?
-Select-
is the preferable stock.
Stock B:
%
Year
1
2
3
4
5
Stock T
0.16
0.05
-0.15
-0.06
0.15
By this relative measure of risk, which stock is preferable?
-Select-
is the preferable stock.
Stock B:
Stock B
0.10
0.02
-0.10
0.04
0.02
c. Compute the coefficient of variation for each stock. (Use the Chapter 1 Appendix if necessary.) Do not round intermediate calculations. Round your answers to four decimal
places. Use the population standard deviation in your computation.
Stock T:
%
d. Compute the geometric mean rate of return for each stock. Round your answers to three decimal places.
Stock T:
%
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