Consider the rate of return of stocks ABC and XYZ$.$

Year rABC rXYZ

$120\%28\%$

$2811$

$31619$

$441$

$529$

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?

multiple choice $1$

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.$)$

d$.$ If you were equally likely to earn a return of $20\%,8\%,16\%,4\%,$ 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$?$

f$.$ Given your answers to parts $($d$)$ and $($e$),$ which measure of average return, arithmetic or geometric, appears more useful for predicting future performance?

multiple choice $2$

Arithmetic

Geometric