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

a. Compute the arithmetic mean annual return for each stock.Which stock is most desirable by this measure?

b. Compute the standard deviation of the annual return for each stock. (Use the Chapter 1 Web Appendix if necessary.) By this measure, which is the preferable stock?

c. Compute the coefficient of variation for each stock.
(Use the Chapter 1 Web Appendix if necessary.)
By this relative measure of risk, which stock is preferable?

d. Compute the geometric mean return for each stock.
Discuss the difference between the arithmetic and the geometric mean return for each stock. Discuss the differences in the mean returns relative to the standard deviation of the return for each stock.

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Year Stock T Stock B 123455 0.19 0.08 0.08 0.03 -0.12 -0.09 -0.03 0.02 0.15 0.04