2-08

The following intormation is available concerning the historical risk and return relationships in the U.S. capital markets: a. Explain why the geometric and arithmetic mean returns are not equal and whether one or the other may be more useful for investment decision making. The arithmetic average assumes while the geometric average assumes b. For the time period indiceted, rank these investments on a relative basis using the coefficient of variation from most to least desirable. Do not round intermediate calculations. Round your answers to two decimal places. c. Assume the arithmetic mean retums in these series are normally distributed. Calculate the range of returns that an investor would have expected to achieve 95 percent of the time from holding real estate. Do not round intermediate calculations. Round your answers to two decimal places. Use a minus sign to enter negative values, if any. Arithmetic: from