(a) Compute the arithmetic mean of the annual rate of return for each stock. Which stock is preferable by this measure? (b) Compute the geometric mean of the annual rate of return for each stock. Which stock is preferable by this measure? (c) Compute the standard deviation of the annual rate of return for each stock. Which stock is preferable by this measure?
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- (Computing rates of return) From the following price data, compute the annual rates of return for Asman and Salinas. Time 1 2 3 12 4 14 (Click on the icon in order to copy its contents into a spreadsheet.) How would you interpret the meaning of the annual rates of return? Asman $9 11 Salinas $30 27 32 36 The rate of return you would have earned on Asman stock from time 1 to time 2 is %. (Round to two decimal places.)(Computing rates of return) From the following price data, compute the annual rates of return for Asman and Salinas. Time Asman Salinas 1 $10 $30 2 12 27 3 11 32 4 13 34 (Click on the icon in order to copy its contents into a spreadsheet.) How would you interpret the meaning of the annual rates of return? Question content area bottom Part 1 The rate of return you would have earned on Asman stock from time 1 to time 2 is enter your response here%. (Round to two decimal places.)Assume these are the stock market and Treasury bill returns for a 5-year period in the attached image: A. What was the risk premium on common stock in each year? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Risk Premium 2013 % 2014 % 2015 % 2016 % 2017 % b. What was the average risk premium? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) c. What was the standard deviation of the risk premium? (Ignore that the estimation is from a sample of data.) (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
- use the end of your stock price data in the pop-up window to answer the following, questions from the Harris and pinwheel companies compute the annual rates return for each time, for both firms value of harris stock 10 8 14 15 value of pinwheel stock 17 34 31 24From the following price data, compute the annual rates of return for Asman and Salinas. Time Asman Salinas 1 $ 10 $ 31 2 13 27 3 12 33 4 14 35 (Click on the icon in order to copy its contents into a spreadsheet.) How would you interpret the meaning of the annual rates of return? Question content area bottom Part 1 The rate of return you would have earned on Asman stock from time 1 to time 2 is enter your response here %. (Round to two decimal places.) Part 2 The rate of return you would have earned on Asman stock from time 2 to time 3 is enter your response here %. (Round to two decimal places.) Part 3 The rate of return you would have earned on Asman stock from time 3 to time 4 is enter your response here %. (Round to two decimal places.) Part 4 The rate of return you would have earned on Salinas stock from time 1 to time 2 is enter your response here %. (Round to two decimal places.) Part 5…Review the excerpted table of historic returns shown below. The returns have all been annualized after having calculated monthly returns for the previous ten years. In addition, information is provided about the average, the volatility, and the sensitivity of the possible investments. Time Period # Market Return Firm W Firm X Firm Y Firm Z T-Bill 1 0.333 0.191 0.218 0.955 0.601 0.035 2 -0.144 -0.423 -0.632 -0.747 -0.472 0.039 3 0.143 0.348 0.470 0.379 0.378 0.040 4 0.316 0.871 0.868 -0.192 0.502 0.036 5 0.178 0.912 0.499 0.694 0.364 0.036 6 -0.014 0.532 0.168 -0.671 -0.064 0.038 … … … … … … … … … … … … … … 119 0.374 0.556 1.014 0.023 0.698 0.037 120 0.173 0.547 0.092 0.658 0.222 0.036 Average Return 0.082 0.113 0.067 0.167 0.121 0.029 Standard…
- Review the excerpted table of historic returns shown below. The returns have all been annualized after having calculated monthly returns for the previous five years. In addition, information is provided about the average, the volatility, and the sensitivity of the possible investments. Time Period # Market Return Firm W Firm X Firm Y Firm Z T-Bill 1 0.333 0.191 0.218 0.955 0.601 0.035 2 -0.144 -0.423 -0.632 -0.747 -0.472 0.039 3 0.143 0.348 0.470 0.379 0.378 0.040 4 0.316 0.871 0.868 -0.192 0.502 0.036 5 0.178 0.912 0.499 0.694 0.364 0.036 6 -0.014 0.532 0.168 -0.671 -0.064 0.038 … … … … … … … … … … … … … … 59 0.374 0.556 1.014 0.023 0.698 0.037 60 0.173 0.547 0.092 0.658 0.222 0.036 Average Return 0.082 0.113 0.067 0.167 0.121 0.029 Standard…You have found the following historical information for the Daniela Company: Stock price EPS Year 1 $48.09 2.54 Target price Year 2 $ 64.22 2.60 Year 3 $ 62.94 2.77 Year 4 $65.62 2.76 Earnings are expected to grow at 9 percent for the next year. Using the company's historical average PE as a benchmark, what is the target stock price in one year? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.Consider a stock whose value increases across an 8-year period as shown in the table. Instructions: Round your answers to two decimal places. a. Calculate the percentage change in the value of the stock from year to year. Percent Change Year 1 2 3 4 5 6 7 8 Stock Value $80.00 92.00 107.00 128.00 145.00 250.00 400.00 670.00 % V b. Calculate the percentage change in the value of the stock across the entire 8-year period. c. Do you think this qualifies as a bubble? & % 4 V N % O Yes, because the percentage change in the stock value is positive every year. O No, because the percentage change in the stock value has not increased. O Yes, because the percentage change in the stock value has increased greatly. O No, because the percentage change in the stock value fluctuates up and down across the 8 years.
- Percentages need to be entered in decimal format, for instance 3% would be entered as .03.) Stock A and Stock B produced the returns shown on the spreadsheet during the past five years (Year -1 is one year ago, Year -2 is two years ago, and so forth). According to the spreadsheet, what is the average rate of return for each stock during the past five years? (Refer to Row 26 for average rate of return.) Based on the information in the spreadsheet, what is the coefficient of variation for each stock and for the portfolio? (Refer to Row 28 for the coefficient of variation.) If you are a risk-averse investor, would you prefer to hold Stock A, Stock B, or the portfolio? Why? Consider a third stock, Stock C, that is available for inclusion in the portfolio. Stock C produced the returns shown in the table during the past five years (add this to column D under Stock C). What is the average return, standard deviation, and coefficient of variation for Stock C? (Refer to Row 27 for…The table given below reports last five years data on annual rates of return (HPYS) on two stocks Year Stock A (%) Stock B (%) 1 16 -10 24 40 30 10 5 -20 20 1. Compute the arithmetic mean of the annual rates of return for both stocks. Which stock is preferable using this measureUsing the data in the table:, a. What was the average annual return of Microsoft stock from 2005-2017? b. What was the annual volatility for Microsoft stock from 2005-2017? a. What was the average annual return of Microsoft stock from 2005-2017? The average annual return is %. (Round to two decimal places.) Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Realized Return for the S&P 500, Microsoft, and Treasury Bills, 2005-2017 S&P 500 Realized Return Microsoft Realized Return Dividends Paid* Year End 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 S&P 500 Index 1211.92 1248.29 3.00% 4.80% 1418.30 1468.36 903.25 4.70% 1.50% 0.10% 0.10% 1115.10 1257.64 1257.61 0.00% 1426.19 0.10% 1848.36 0.00% 0.00% 2058.90 2043.94 0.00% 0.20% 2238.83 2673.61 0.80% *Total dividends paid by the 500 stocks in the portfolio, based on the number of shares of each stock in the index, adjusted until the end of the year, assuming they were…