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The stocks on ABC Company and XYZ Company have the following returns over the last four years. (10 marks) Year ABC Returns XYZ Returns 1
The stocks on ABC Company and XYZ Company have the following returns over the last four years. (10 marks)
Year | ABC Returns | XYZ Returns |
1 | -0.2 | 0.05 |
2 | 0.5 | 0.09 |
3 | 0.3 | -0.12 |
4 | 0.1 | 0.2 |
a. Calculate the average return on ABC. (1 mark)
b. Calculate the average return on XYZ. (1 mark)
c. Calculate the variance and standard deviation on the ABC returns. (2.5 marks)
d. Calculate the variance and standard deviation on the XYZ returns. (2.5 marks)
e. Using the coefficient of variation (standard deviation/average return) to compare the two stocks, which stock is preferable? (3 marks)
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