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Five years of realized returns for BLM are given in the following table. Remember: While BLM was started 40 years ago, its common stock has
Five years of realized returns for BLM are given in the following table. Remember: While BLM was started 40 years ago, its common stock has been publicly traded for the past 25 years. The returns on its equity are calculated as arithmetic returns. The historical returns for BLM for 2012 to 2015 are: Given the preceding data, the average realized return on BLM's stock is 11.43% Based on economic conditions, you've compiled the following estimates of returns from BLM's stock and the probabilities associated with the economic condition for the next year: The standard deviation of returns for Blue Llama Mining's stock is If investors expect the average realized return from 2012 to 2016 on BLM's stock to continue into the future, its coefficient of variation (v) will be ____. Suppose you need to invest $10,000 in Blue Llama Mining Inc. or another company called Robonomics Corp. You know that Robonomics Corp. has a coefficient of variation of 2.36, and you have calculated the coefficient of variation for BLM. To make your investment decision, you spend some time analyzing the situation. Based on your analysis, which of the following statements is true? Blue Llama Mining (BLM) Inc. is two times more risky than Robonomics Corp. Robonomics Corp. is two times more risky than Blue Llama Mining (BLM) Inc
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