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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 1

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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 1 0.15 0.09 2 1 0.05 -0.06 3 0.05 -0.05 0.04 0.05 4 -0.08 5 0.18 a. 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- b. 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. Stock T: Stock B: % By this measure, which is the preferable stock? -Select- is the preferable stock. C. 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. Stock T: Stock B: By this relative measure of risk, which stock is preferable? -Select- is the preferable stock. d. Compute the geometric mean rate of return for each stock. Round your answers to three decimal places. Stock T: % Stock B: %

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