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Consider the rate of return of stocks ABC and XYZ. Year 2 3 ABC 18% 11 14 4 3 rxyz 30% 10 17 0 -7
Consider the rate of return of stocks ABC and XYZ. Year 2 3 ABC 18% 11 14 4 3 rxyz 30% 10 17 0 -7 5 a. Calculate the arithmetic average return on these stocks over the sample period. (Round your answers to 2 decimal places.) ABC XYZ Arithmetic Average 10.00% 10.00 % b. Which stock has greater dispersion around the mean return? ABC O XYZ c. Calculate the geometric average returns of each stock. What do you conclude? (Do not round intermediate calculations. Round your answers to 2 decimal places.) | |XYZ Geometric Average 9.85 % 9.24% d. If you were equally likely to earn a return of 18%, 11%, 14%, 4%, or 3% 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.) Expected rate of return 9 % e. What if the five possible outcomes were those of stock XYZ? Expected rate of return
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