3.06 U.S. CAPITAL MARKETS TOTAL ANNUAL RETURNS, 1990-2015 Arithmetic Geometric Standard Deviation of Investment Category Mean Mean Return Common stocks 10.96% 9.33% 18.79 Treasury Bills 3.00 23 Long-term government 5.15 5.01 7.2 bonds Long-term corporate 5.30 4.95 bonds Real estate 9.77 9.71 4.9 Based on arithmetic mean 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 Select , while the geometric average assumes Select b. For the time pened indicated, rank these investments on a relative basis using the coefficient of variation from most to least desirable. Do not found intermediate calculations. Round your answers to two decimal places Rank Investment Category Coefficient of variation, % 1 Select 2 3 4 -Select 5 act Assume the arithmetic mean returns 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 found intermediate calculations. Round your answers to two decimal places. Use a minus sign to enter negative values, if any Anthmetics from to Mean Mean Return 9.33% 10.96% 3.06 3.00 18.7% 2.3 5.15 5.01 Investment Category Common stocks Treasury bills Long-term government bonds Long-term corporate bonds Real estate Based on arithmetic mean. 7.2 5.30 4.95 9.4 9.77 9.71 4.9 eometric and arithmetic mean returns are not equal and whether one or the other may be more useful for investment decision mak erage assumes -Select while the geometric average assumes -Select- d indicated, rar-Select basis using the coefficient of variation from most to least desirable. Do not round in wo decimal plad compounding or interest-on-interest Investment Category the presence of simple interest Coefficient of variation, % select 2 3 -Select- -Select- Select -Select- 4 5 metic mean returns in these series are normally distributed. Calculate the range of returns that an investor would have expected to ach te. Do not round intermediate calculations, Round your answers to two decimal places. Use a minus sign to enter negative values, if any. % to Investment Category Mean Mean Return Common stocks 10.96% 9.33% 18.7% Treasury bills 3.06 3.00 2.3 Long-term government 5.15 5.01 7.2 bonds Long-term corporate 5.30 4.95 9.4 bonds Real estate 9.77 9.71 4.9 Based on arithmetic mean. eometric and arithmetic mean returns are not equal and whether one or the other may be more useful for investment decision erage assumes -Select- Mwhile the geometric average assumes Select: indicated, rank these investments on a relative basis using the coefficient of variation fr Select- rou vo decimal places. compounding or interest-on-interest Rank Investment Category Coefficie the presence of simple interest 1 -Select 2 -Select 3 Select 4 Select 5 -Select- netic mean returns in these series are normally distributed. Calculate the range of returns that an investor would have expected to e. Do not round intermediate calculations, Round your answers to two decimal places. Use a minus sign to enter negative values rithmetic mean returns are not equal and whether one or the other may be more useful for investr -Select- while the geometric average assumes -Select- nk these investments on a relative basis using the coefficient of variation from most to least desirab ces. Rank Investment Category Coefficient of variation, % 1 -Select- 2 -Select- 3 Common Stocks 5 Long-term corporate bonds Eurns in these series are normally ed intermediate calculations. Round Long-term government bondsge of returns that an investor would ha places. Use a minus sign to enter nega Real estate % to % Treasury bills