QUESTION THREE (b) During the past five years, you had investments in companies listed on the GSE. The annual rates of returns from the two stocks X and Y are shown in the table below. Compute questions (i-v) for 4marks each. (ii) (iii) (iv) (v) Year 112345 Return of X (% annual) 19 8 -12 -3 15 Return of Y (% annual) 8 3 -9 2 4 Compute the arithmetic mean annual rate of return for each stock. Which stock is most desirable by this measure? Explain Compute the standard deviation of the annual rate of return for each stock. By this measure which stock is preferable? Explain Compute the coefficient of variation for each stock. By this relative measure, which stock is preferable? Explain 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.

QUESTION THREE (b) During the past five years, you had investments in companies listed on the GSE. The annual rates of returns from the two stocks X and Y are shown in the table below. Compute questions (i-v) for 4marks each. (ii) (iii) (iv) (v) Year 112345 Return of X (% annual) 19 8 -12 -3 15 Return of Y (% annual) 8 3 -9 2 4 Compute the arithmetic mean annual rate of return for each stock. Which stock is most desirable by this measure? Explain Compute the standard deviation of the annual rate of return for each stock. By this measure which stock is preferable? Explain Compute the coefficient of variation for each stock. By this relative measure, which stock is preferable? Explain 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.

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

8th Edition

ISBN:9781285065137

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter8: Risk And Rates Of Return

Section: Chapter Questions

Problem 4DQ: Select one of the four stocks listed in Question 3 by entering the companys ticker symbol on the...

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