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Consider the rate of return of stocks ABC and XYZ. Year 1 2 3 4 5 20% 11 19 4 1 XYZ 34% 11 19

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Consider the rate of return of stocks ABC and XYZ. Year 1 2 3 4 5 20% 11 19 4 1 XYZ 34% 11 19 -9 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.) Arithmetic Average ABC |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.) Geometric Average ABC % % XYZ d. If you were equally likely to earn a return of 20%, 11%, 19%, 4%, 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.) Expected rate of return % Consider the rate of return of stocks ABC and XYZ. Year 1 2 3 4 5 20% 11 19 4 1 XYZ 34% 11 19 0 -9 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.) Arithmetic Average ABC |XYZ % %

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