A
To calculate: Arithmetic average returns of all the stocks.
Introduction: Arithmetic average returns is sum of all the returns divided by number of years. Arithmetic average is simply mean of the average values.
B
To calculate: Find the stock which has greater dispersion.
Introduction: Dispersion defines as how many times a number varies in data. It can be evaluated by using standard deviation, range, and variance.
C
To calculate: The geometric mean of stocks.
Introduction: Geometric mean calculated for the series which has a common ratio between two terms. For example 3, 9, 27, 81 here the common ratio is 3 between two terms.
D
To calculate: Expected
Introduction: The expected return rate is mean of return means sum of the all return divided by the total number of years whereas the return is a product of return and weight of particular stock.
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- The following table reports the percentage of stocks in a portfolio for nine quarters: a. Construct a time series plot. What type of pattern exists in the data? b. Use trial and error to find a value of the exponential smoothing coefficient that results in a relatively small MSE. c. Using the exponential smoothing model you developed in part (b), what is the forecast of the percentage of stocks in a typical portfolio for the second quarter of year 3?arrow_forwardYou have observed the following returns over time: Assume that the risk-free rate is 6% and the market risk premium is 5%. a. What are the betas of Stocks X and Y? b. What are the required rates of return on Stocks X and Y? c. What is the required rate of return on a portfolio consisting of 80% of Stock X and 20% of Stock Y?arrow_forwardSuppose that the annual return for particular stock follows the same distribution every year, and that the return for any given year is independent of the returns for any prior years. Based on an analysis of the stock's annual returns over an 12 year period, it is determined that the 95% confidence interval for the stock's expected annual return is given by (-0.1724, 0.2861). Find the volatility of the stock. Use the approximation formula from Berk and DeMarzo. 38.52% 40.90% 42.09% 37.32% 39.71%arrow_forward
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