Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

The historical returns for two investments A and B are summarized in the following table for the period 2 0 1 6 to 2 0

The historical returns for two investments A and B are summarized in the following table for the period 2016 to 2020. Use the data that follows.
Year Rate of Return
201621.1%10.4%
20174.9%12.8%
201812.2%14.6%
201927.2%17.6%
a. On the basis of a review of the return data, which investment appears to be more risky? Why?
b. Calculate the standard deviation for each investment's returns.
c. On the basis of your calculations in part b, which investment is more risky? Compare this conclusion to your observation in part a.
On the basis of a review of the return data, which investment appears to be more risky? Why?(Choose the best answer below.)
A.
The riskier investment appears to be investment B, with returns that are closer to the average relative to investment A, whose returns are farther from the average.
B.
The riskier investment appears to be investment A, with returns that vary widely from the average relative to investment B, whose returns show less deviation from the average.
C.
The riskier investment appears to be investment B, with returns that vary widely from the average relative to investment A, whose returns show less deviation from the average.
D.
Investment A and investment B have equal risk because the average returns are the same
The standard deviation for investment A is ......
Part 3
The standard deviation for investment B is....%(Round to two decimal places)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Advanced Accounting

Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik

10th edition

0-07-794127-6, 978-0-07-79412, 978-0077431808

Students also viewed these Finance questions

Question

Hi Tutors, Could you please help with attached finance assignment?

Answered: 1 week ago