Appendix

During the past five years, you owned two stocks that had the following annual rates of return: Year Stock T Stock B 1 0.16 0.07 2 0.12 0.05 3 -0.09 -0.05 4 -0.05 0.02 5 0.16 0.06 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-vis more desirable because the arithmetic mean annual rate of return is -Select- 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- 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 Computation of Varian and Standard Devin wirama ne triate www , pilaa , Valar Colla maiya Per - The varirar i' lettaria tamilute tarieties - - , lal anae . Parties a terial 2013 4 M l nataliens means Tamarinities Year SOR - - als www. Coefficient of Variation The . will you that where Cateine