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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

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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

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