Problem $1-05$

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

$\backslash$table$[[$Year$,$Stock T$,$Stock B$],[1,0\mathrm{.}16,0\mathrm{.}09],[2,0\mathrm{.}09,0\mathrm{.}03],[3,-0\mathrm{.}15,-0\mathrm{.}11],[4,-0\mathrm{.}08,0\mathrm{.}03],[5,0\mathrm{.}18,0\mathrm{.}04]]$

a$.$ Compute the arithmetic mean annual rate of retum for each stock. Round your answers to one decimal place.

Stock T: $\%$

Stock B: $\%$

Which stock is most desirable by this measure?

is more desirable because the arithmetic mean annual rate of return is

b$.$ Compute the standard deviation of the annual rate of return for each stock. $($Use Chapter $1$ Appendix if necessary.$)$ Do not round intermediate calculations. Round your answers to three decimal places.

Answer with the population standard deviation.

Stock $T$ : $0$

Stock $B$ : $\%$

By this measure, which is the preferable stock?

$$ is the preferable stock.

c$.$ Compute the coefficient of variation for each stock. $($Use the Chapter $1$ Appendix if necessary.$)$ Do not round intermediate calculations. Round your answers to four decimal places. Use the population standard deviation in your computation.

Stock $T$ : $$

Stock $B$ : $$

By this relative measure of risk, which stock is preferable?

$$ is the preferable stock.

d$.$ Compute the geometric mean rate of return for each stock. Round your answers to three decimal places.

Stock T: $\%$

Stock $B\%$