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5. Problem 1-05 eBook Problem 1-05 During the past five years, you owned two stocks that had the following annual rates of return: Year Stock

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5. Problem 1-05 eBook Problem 1-05 During the past five years, you owned two stocks that had the following annual rates of return: Year Stock T 0.19 Stock B 0.10 1 2 0.10 0.02 3 -0.14 -0.05 4 -0.05 0.01 0.06 5 0.10 a. Compute the arithmetic mean annual rate of return for each stock. Round your answers to one decimal place. Stock T: % Stock B: Which stock is most desirable by this measure? -Select- v is more desirable because the arithmetic mean annual rate of return is -Select- v. b. Compute the standard deviation of the annual rate of return for each stock. (Use Chapter 1 Appendix if necessary.) Do not round intermediate calculations. Round your answers to three decimal places. Stock T: % Stock B: % By this measure, which is the preferable stock? -Select- v is the preferable stock. c. Compute the coefficient of variation for each stock. (Use the Chapter 1 Appendix if necessary.) Do not round intermediate calculations. Round your answers to four decimal places. Stock T: Stock B: By this relative measure of risk, which stock is preferable? -Select- is the preferable stock. d. Compute the geometric mean rate of return for each stock. Round your answers to three decimal places. Stock T: % Stock B: %

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