Calculate the arithmetic average return on these stocks

Assignment Help Finance Basics
Reference no: EM13567284

Consider the rate of return of stocks ABC and XYZ.

Year

rABC

rXYZ

1

20%

30%

2

12

12

3

14

18

4

3

0

5

1

10

a. Calculate the arithmetic average return on these stocks over the sample period.

b. Which stock has greater dispersion around the mean?

c. Calculate the geometric average returns of each stock. What do you conclude?

d. If you were equally likely to earn a return of 20%, 12%, 14%, 3%, or 1%, in each year (these are the five annual returns for stock ABC), what would be your expected rate of return? What if the five possible outcomes were those of stock XYZ?

Reference no: EM13567284

Questions Cloud

Calculate the time-weighted geometric average return on : a manager buys three shares of stock today and then sells one of those shares each year for the next 3 years. his
A company has offered to supply this part for 1299 per unit : x company is considering buying a part next year that they currently make. this years total production costs for 11900
Zippy inc manufactures large crates of microwaveable : zippy inc. manufactures large crates of microwaveable popcorn that are typically sold to distributors. its main factory
By using the article the service-driven service company by : by using the article the service-driven service company by leonard a. schlesinger and james l. heskett. please make a
Calculate the arithmetic average return on these stocks : consider the rate of return of stocks abc and xyz.yearrabcrxyz1203021212314184305110a. calculate the arithmetic average
Prepare the companys production budget for the third : bandage supply corporation manufactures and sells bandages. expected sales of bandages in boxes for the upcoming months
Staceys piano rebuilding company has been operating for one : staceys piano rebuilding company has been operating for one year 2010. at the start of 2011 its income statement
You reckon that it will produce an inflow after operating : 1. a factory costs 800000. you reckon that it will produce an inflow after operating costs of 170000 a year for 10
The contribution margin per unit was 2 and fixed expenses : a total of 42600 units were sold last year. the contribution margin per unit was 2 and fixed expenses totaled 28400 for

Reviews

Write a Review

Finance Basics Questions & Answers

  Local real estate investor in orlando is considering three

a local real estate investor in orlando is considering three alternative investments a motel a restaurant or a theater.

  Set up the amortization schedule for a 25000 loan to be

a. set up an amortization schedule for a 25000 loan to be repaid in equal installments at the end of each of the next

  Production planning department of graystar prefabricated

production planning department of graystar prefabricated homes company has to decide which types of homes to produce

  The eoq is particularly sensitive to which of the following

The EOQ is particularly sensitive to which of the following?

  Static tradeoff model of optimal capital structure

Which of the following expresses the value of the levered firm (VL) in the Static Tradeoff model of optimal capital structure?

  What is the amount of the monthly payments

A commercial bank will loan you $7,500 for two years to buy a car. The loan must repaid in 24 equal monthly payments. The annual interest rate on the loan is 12% of the unpaid balance. What is the amount of the monthly payments?

  What was its interest expense

Little Books Inc. recently reported $3 million of net income. Its EBIT was $6 million, and its tax rate was 40%. What was its interest expense?

  Which hedging technique would you choose

Structure a synthetic forward that would hedge your exposure. What is the effective $/Euro rate that you lock in?

  Sec enforcement

What is the most recent litigation brought by SEC against public firm or against the accounting firm? What is the most recent Staff Accounting Bulletin which provides guidance to profession? What was the guidance given?

  Calculate the expected value

Assume you won the lottery and were offered a choice of either $500,000 in cash or a gamble in which you would get $1 million if a head were flipped but zero if a tail came up.

  What would net income and return on assets

Database Systems is considering expansion into a new product line. Assets to support expansion will cost $380,000. It is estimated that Database can generate $1,390,000 in annual sales, with a 6 percent profit margin.

  How should such entities make capital budgeting decisions

Capital Budgeting in Not-for-Profit-Entities. Are the capital budgeting criteria we discussed applicable to not for profit corporations? How should such entities make capital budgeting decisions?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd