(10-1)

Consider the rate of return of stocks ABC and XYZ. a. Calculate the arithmetic average return on these stocks over the sample perlod. (Round your answers to 2 decimal places.) Answer is complete but not entirely correct. b. Which stock has greater dispersion around the mean return? ABC XYZ c. Calculate the geometric average returns of each stock. What do you conclude? (Do not round Intermedlate calculatlons. Round your answers to 2 declmal places.) Answer is complete but not entirely correct. d. If you were equally likely to earn a return of 22%,8%,10%,3%, or 1% In each year (these are the five annual returns for stock ABC ), what would be your expected rate of return? (Do not round Intermedlate calculations.) Answer is complete but not entirely correct. e. What If the five posslble outcomes were those of stock XYZ ? x Answer is complete but not entirely correct. f. Given your answers to parts (d) and (e), which measure of average return, arlthmetic or geometric, appears more useful for predicting future performance? Arlthmetic Geometric *