Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Consider the rate of return of stocks ABC and XYZ. a. Calculate the arithmetic average return on these stocks over the sample period. (Round your

image text in transcribedimage text in transcribed

Consider the rate of return of stocks ABC and XYZ. a. Calculate the arithmetic average return on these stocks over the sample period. (Round your answers to 2 decimal places.) b. Which stock has greater dispersion around the mean return? ABCXYZ c. Calculate the geometric average returns of each stock. What do you conclude? (Do not round intermediate calculations. Roun your answers to 2 decimal places.) 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.) d. If you were equally likely to earn a return of 20%,12%,19%,4%, or 2% 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.) e. What if the five possible outcomes were those of stock XYZ

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Public Finance Fundamentals

Authors: K. Moeti

3rd Edition

148512946X, 9781485129462

More Books

Students also viewed these Finance questions