During the past five years, you owned two stocks that had the following annual rates of return:

Question:

a. Compute the arithmetic mean annual rate of return for each stock. Which stock is most desirable by this measure?
b. Compute the standard deviation of the annual rate of return for each stock. By this measure, which is the preferable stock?
c. Compute the coefficient of variation for each stock. By this relative measure of risk, which stock is preferable?
d. Compute the geometric mean rate of return for each stock. Discuss the difference between the arithmetic mean return and the geometric mean return for each stock.
Discuss the differences in the mean returns relative to the standard deviation of the return for eachstock.

Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing...