Question
Prices and Dividends for Investments A and B for the last 5 years are provided in the following: Year Price A Dividend A Price B
Prices and Dividends for Investments A and B for the last 5 years are provided in the following:
Year | Price A | Dividend A | Price B | Dividend B |
2012 | 80 | 0 | 150 | 0 |
2013 | 84 | 1 | 135 | 2 |
2014 | 75 | 2 | 130 | 3 |
2015 | 71 | 3 | 174 | 4 |
2016 | 90 | 4 | 165 | 5 |
a. Calculate the arithmetic average return for Investment A during this 5 year period.
b. Calculate the arithmetic average return for Investment B during this 5 year period.
c. Calculate the standard deviation of returns for Investment A during this 5 year period.
d. Calculate the standard deviation of returns for Investment B during this 5 year period.
e. If the returns of Investment A are normally distributed and the recent history (2012 to 2016) represents future expected return and expected risk, what is the chance of losing money next year Investment A?
f. If the returns of Investment B are normally distributed and the recent history (2012 to 2016) represents future expected return and expected risk, what is the chance of losing money next year Investment B?
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