22) info.o Ina "REE always earned 4.5% 1 arty fuc Q 5.23. Stock STRANGE always alternated be- tween +20% and -10% in the past. Stock RISK- Corporate k.ivo-ye sto NGE? (51 2. What WOC hfitions 1. What was the average rate of annum. stock FISKFREE? erach ann return for the average rate of return for ok? Jom dis 3. On a 1-year basis, would a risk-neutral in- vestor prefer +20% or -10% ability, or 4.5% for sure? with equal prob- 4. How much would each dollae Sted 10 years ago in stock A have earned? A have earned? 5. How much would each dollar invested 10 years ago in stock B have earned? 6. What is going on here? fo. 1910 2022

Q 5.23. Stock STRANGE always alternated between +20% and 10% in the past. Stock RISKFREE always earned 4.5% per annum. 1. What was the average rate of return for stock STRANGE? 2. What was the average rate of return for stock FisKFREE? 3. On a 1-year basis, would a risk-neutral investor prefer +20% or 10% with equal probability, or 4.5% for sure? 4. How much would each dollar invested 10 years ago in stock A have earned? 5. How much would each dollar invested 10 years ago in stock B have earned? 6. What is going on here