# Question

Stocks may be categorized by industry. The data on the following page represent the 5-year rates of return (in percent) for a sample of consumer goods stocks and energy stocks ending November 10, 2010.

(a) Determine the mean and the median rate of return for each industry. Which sector has the higher mean rate of return? Which sector has the higher median rate of return?

(b) Determine the standard deviation for each industry. In ﬁnance, the standard deviation rate of return is called risk.

Typically, an investor “pays” for a higher return by accepting more risk. Is the investor paying for higher returns in this instance? Do you think the higher returns are worth the

cost?

(a) Determine the mean and the median rate of return for each industry. Which sector has the higher mean rate of return? Which sector has the higher median rate of return?

(b) Determine the standard deviation for each industry. In ﬁnance, the standard deviation rate of return is called risk.

Typically, an investor “pays” for a higher return by accepting more risk. Is the investor paying for higher returns in this instance? Do you think the higher returns are worth the

cost?

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