Find standard deviation of the annual rate of return

Reference no: EM1346915

During the past five years, you owned two stocks that had the following annual rates of return:

Year Stock T Stock B
1 17.0% 7.0%
2 6.0% 2.0%
3 -10.0% -8.0%
4 -1.5% 1.5%
5 14.0% 5.0%

a. Compute the arithmetic mean annual rate of return for each stock. Which stock is most desirable by this measure?
b. Compute the standard deviation of the annual rate of return for each stock. By this measure, which is the preferable stock (lowest risk)?
c. Compute the coefficient of variation for each stock. By this relative measure of risk, which stock is preferable?
d. Compute the geometric mean rate of return for each stock.

Discuss the difference between the arithmetic mean return and the geometric mean return for each stock.
Discuss the differences in the mean returns relative to the standard deviation of the return for each stock.

Reference no: EM1346915

Questions Cloud

Explaining labels in dns domain names : From RFC 1034, DNS domain names are composed of labels. Are there any labels which nodes are not allowed to allot to their data? If so, what are they?

Explain what are the sources of conflict : Explain what are the sources of conflict and how can a communication plan help minimize possible conflict- explain a motivation levels and how they affect the project life cycle

Find out the mass of hypothetical spherical asteroid : An uncharged capacitor is connected to the terminals of a 4 battery, and 12 flows to the positive plate. The 4 battery is then disconnected and replaced with a 7 battery, with the positive and negative terminals connected in the same manner as bef..

Financial management : Define each term given below and identify their roles in finance. Finance, Efficient market, Primary market, Secondary market.

Find standard deviation of the annual rate of return : During the last 5 years, you owned two (2) stocks that had the following yearly rates of return and calculate the arithmetic mean yearly rate of return for every stock.

Show the interpersonal communication : Management and media - Explain why is media richness important to interpersonal communication?

Illustrate what price should be charged to maximize profits : Explain how much output should be produced in palnt 1 in order to maximize profits. Illustrate what price should be charged to maximize profits.

How far the piston move : A professor's office door is 0.95 wide, 2.2 high, 4 thick; has a mass of 22 , and pivots on frictionless hinges. A "door closer" is attached to door and the top of door frame. When the door is open and at rest, the door closer exerts a torque of 5..

Which cost systems would companies use : Recognize which costing system - job order or process cost - the following companies would use:

User Account

All Pages