Question: The historical returns for two investmentsA and Bare summarized in the following table for the period 2016 to 2020. Use the data to answer the

The historical returns for two investments—A and B—are summarized in the following table for the period 2016 to 2020. Use the data to answer the questions that follow.

Year 2016 2017 2018 2019 2020 Average A Rate of Return 19%

a. On the basis of a review of the return data, which investment appears to be more risky? Why?
b. Calculate the standard deviation for each investment’s returns.
c. On the basis of your calculations in part b, which investment is more risky?
Compare this conclusion to your observation in part a.

Year 2016 2017 2018 2019 2020 Average A Rate of Return 19% 1% 10% 26% 4% 12% B 8% 10% 12% 14% 16% 12%

Step by Step Solution

★★★★★

3.37 Rating (166 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

a Investment A with returns that vary widelyfrom 1 to 26appears to b... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Fundamentals Of Investing Questions!

Two matrices A and B are called row -equivalent (written A - B) if there is a sequence of elementary row operations carrying A to B. (a) Show that A - B if and only if A = UB for some invertible...

The two vectors A and B are drawn from a common point, and C = 1 + B. (a) Show that if C2 = A2 + B2, the angle between the vectors A and B is 90. (b) Show that if C2

Two very large tanks A and B are each partially filled with 100gallons of brine. Initially, 100 pounds of salt is dissolved in the solution in tank A and 50 pounds of salt is dissolved in...

9. The historical returns for two investmentsA and B-are summarized in the following table for the period 2016 to 2020, Use the data to answer the questions that follow. a. On the basis of a review...

Data Table 1 The historical returns for two investments-A and B-are summarized in the following table for the period 2016 to 2020, E: . Use the data to answer the questions that follow. a. On the...

PLEASE SHOW STEPS WITHOUT EXCEL The historical returns for two investmentsA and Bare summarized in the following table for the period 2016 to 2020, E Use the data to answer the questions that follow....

The historical returns for two investmentsA and Bare summarized in the following table for the period 2016 to 2020, Use the data to answer the questions that follow. a. On the basis of a review of...

For this question i only need part B done The historical returns for two investmentsA and Bare summarized in the following table for the period 2016 to 2020, Use the data to answer the questions that...

The historical returns for two investmentsA and Bare summarized in the following table for the period 2016 to 2020, A Year Rate of Return 2016 22.4% 12.7% 2017 4.6% 14.9% 2018 14.7% 18.0% 2019 29.3%...

The historical returns for two investments_A and B-are summarized in the following table for the period 2016 to 2020 , Use the data to answer the questions that follow. a. On the basis of a review of...

The motorcycle is traveling at 40 m/s when it is at A. If the speed is then decreased at v=-(0.05 s) m/s, where s is in meters measured from A, determine its speed and acceleration when it reaches B....

a) Consider an algorithm to find the maximum value in an (unsorted) array. Now, think of an algorithm to find the second largest value in the array. Which is harder to implement? Answer: Which takes...

do you include fixed deposit in statement of profit or loss

=+ b. How might this change represent a trade-off between equality and efficiency?

Al Cromwell places a market order to buy a round lot of Thomas, Inc., common stock, which is traded on the NYSE and is currently quoted at $50 per share. Ignoring brokerage commissions, determine how...

Imagine that you have placed a limit order to buy 100 shares of Sallisaw Tool at a price of $38, although the stock is currently selling for $41. Discuss the consequences, if any, of each of the...

If you place a stop-loss order to sell at $23 on a stock currently selling for $26.50 per share, what is likely to be the minimum loss you will experience on 50 shares if the stock price rapidly...

Hiring a new associate or full professor at NTNU, is a process that involves several steps and actors. Before we describe this process, it is important to remember the organizational structure of the...

You buy a bond for $940 that has a coupon rate of 5.00% and a maturity of 5 -years. A year later, the bond price is $1,040. (- ssume a face value of $1,000 and annual coupon payments.) a. What is the...

Calculate the correlation of the two stocks below based on the scenario forecasts given: Probability Atlantis Co. Baltazaar Inc. Boom 0.3 18 14% Normal 0.6 15 4% Bust 0.1 -10% -6% Provide your answer...