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

Year rABC rXYZ

$124\%36\%$

$21311$

$31419$

$431$

$5310$

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.$)$

b$.$ Which stock has greater dispersion around the mean return?

multiple choice $1$

XYZ

ABC

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 $24\%,13\%,14\%,3\%,$ 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. 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.$)$

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

multiple choice $2$

Arithmetic

Geometric