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Consider the rate of return of stocks ABC and XYZ. Year r ABC r XYZ 1 22% 36% 2 10 10 3 19 17 4
Consider the rate of return of stocks ABC and XYZ.
Year | rABC | rXYZ |
---|---|---|
1 | 22% | 36% |
2 | 10 | 10 |
3 | 19 | 17 |
4 | 3 | 0 |
5 | 1 | 8 |
c. If you were equally likely to earn a return of 22%, 10%, 19%, 3%, or 1%, in each year (these are the five annual returns for stock ABC), what would be your expected rate of return? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
d. What if the five possible outcomes were those of stock XYZ? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
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