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Problem $1-05$

During the past five years, you owned two stocks that had the following annual rates of return:

Year Stock T Stock B

$10\mathrm{.}190\mathrm{.}08$

$20\mathrm{.}060\mathrm{.}05$

$3-0\mathrm{.}05-0\mathrm{.}10$

$4-0\mathrm{.}050\mathrm{.}04$

$50\mathrm{.}130\mathrm{.}02$

Compute the arithmetic mean annual rate of return for each stock. Round your answers to one decimal place.

Stock T:

$\%$

Stock B:

$\%$

Which stock is most desirable by this measure?

$-$Select$-$

is more desirable because the arithmetic mean annual rate of return is

$-$Select$-$

$.$

Compute the standard deviation of the annual rate of return for each stock. $($Use Chapter $1$ Appendix if necessary.$)$ Do not round intermediate calculations. Round your answers to three decimal places. Answer with the population standard deviation.

Stock T:

$\%$

Stock B:

$\%$

By this measure, which is the preferable stock?

$-$Select$-$

is the preferable stock.

Compute the coefficient of variation for each stock. $($Use the Chapter $1$ Appendix if necessary.$)$ Do not round intermediate calculations. Round your answers to four decimal places. Use the population standard deviation in your computation.

Stock T:

Stock B:

By this relative measure of risk, which stock is preferable?

$-$Select$-$

is the preferable stock.

Compute the geometric mean rate of return for each stock. Round your answers to three decimal places.

Stock T:

$\%$

Stock B:

$\%$