Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Consider the rate of return of stocks ABC and XYZ. Year 1 2 3 4 5 20% 12 19 4 2 32% 12 19 1

image text in transcribed

image text in transcribed

image text in transcribed

image text in transcribed

Consider the rate of return of stocks ABC and XYZ. Year 1 2 3 4 5 20% 12 19 4 2 32% 12 19 1 -7 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 % b. Which stock has greater dispersion around the mean return? 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.) es Geometric Average ABC % XYZ % Print eferences f. Given your answers to (d) and (e), which measure of average return, arithmetic or geometric, appears more useful for predicting future performance? Arithmetic Geometric

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

More Books

Students also viewed these Finance questions