CALCUTING RETURNS AND RISK

7-16 Calculating returns and risk On January 2, 2001, you purchased 500 shares of Loewen Group for $9.60 per share. The following information is available con- cerning the yearly dividend the company paid and the year-end share price for the eight years to 2008. CHALLENGE Date Dividends paid during year Stock price at year-end Dec. 31, 2001 Dec. 31, 2002 Dec. 31, 2003 Dec. 31, 2004 Dec. 31, 2005 Dec. 31, 2006 Dec. 31, 2007 Dec. 31, 2008 $0.00 $0.12 $0.16 $0.40 $0.48 $0.62 $0.75 $1.00 $10.65 $15.23 $12.25 $ 9.25 $14.50 $21.75 $30.35 $38.00 a. Calculate your dollar and percentage return on the investment in Loewen for each year. b. Calculate your dollar return on the investment. c. Calculate your arithmetic and geometric mean returns for this period. Why are the arithmetic and geometric means different? d. Calculate the standard deviation of returns for this period. Interpret the answer. e. Calculate and interpret the coefficient of variation for your investment in Loewen over this period