In: Finance
Problem 1-05
During the past five years, you owned two stocks that had the following annual rates of return:
Year | Stock T | Stock B |
---|---|---|
1 | 0.19 | 0.06 |
2 | 0.09 | 0.06 |
3 | -0.06 | -0.07 |
4 | -0.03 | 0.02 |
5 | 0.14 | 0.03 |
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?
_______ , is more desirable because the arithmetic mean annual rate of return is _______ .
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.
Stock T: _______ % Stock B: _______ %
By this measure, which is the preferable stock?
_______ is the preferable stock.
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.
Stock T: _______ % Stock B: _______ %
By this relative measure of risk, which stock is preferable?
_______ is the preferable stock.
d. Compute the geometric mean rate of return for each stock. Round your answers to three decimal places.
Stock T: _______ % Stock B: _______ %