Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Consider the rate of return of stocks ABC and XYZ. Required: a. Calculate the arithmetic average return on these stocks over the sample period. (Do
Consider the rate of return of stocks ABC and XYZ. Required: a. Calculate the arithmetic average return on these stocks over the sample period. (Do not round intermediate calculations. Round your answers to 2 decimal places.) c. Calculate the geometric average returns of each stock. (Do not round intermediate calculations. Round your answers to 2 decimal places.) d. If you were equally likely to earn a return of 23%,10%,16%,6%, 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.) e. What if the five possible outcomes were those of stock XYZ ? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started