Consider the following annual returns of Molson Coors and International Paper:  MolsonCoorsInternational PaperYear 120.3%5.3%Year 2-9.2−18.3Year 340.5−0.1Year 4-8.527.4Year 517.0−11.9   Compute each stock’s average return, standard deviation, and coefficient of variation. (Round your answers to 2 decimal places.)  Molson CoorsInternational PaperAverage return_________.__%_______.__%Standard deviation__________.__%_______.__%Coefficient of variation__________.____________.__

Question
Asked Nov 3, 2019
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Consider the following annual returns of Molson Coors and International Paper:
 

  Molson
Coors
International Paper
Year 1 20.3% 5.3%
Year 2 -9.2 −18.3
Year 3 40.5 −0.1
Year 4 -8.5 27.4
Year 5 17.0 −11.9
     


Compute each stock’s average return, standard deviation, and coefficient of variation. (Round your answers to 2 decimal places.)

 
  Molson Coors International Paper
Average return _________.__% _______.__%
Standard deviation __________.__% _______.__%
Coefficient of variation __________.__ __________.__
 

 

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Expert Answer

Step 1

The average return, standard deviation and coefficient of deviation are calculated to select the company with best returns in future. It helps an investor to evaluate the company before investing.

Step 2

Given:

Returns:

Company MC (%)
20.3
Company IP (%)
Year
1
5.3
(9.2)
40.5
2
(18.3)
(0.1)
27.4
(8.5)
5
17.0
(11.9)
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Company MC (%) 20.3 Company IP (%) Year 1 5.3 (9.2) 40.5 2 (18.3) (0.1) 27.4 (8.5) 5 17.0 (11.9)

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Step 3

Formulas us...

Sum of returns
Average return
No. of years
N
Σ(-3).
Standard deviation
N-1
Standard deviation
Coefficient of variation
Average return
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Sum of returns Average return No. of years N Σ(-3). Standard deviation N-1 Standard deviation Coefficient of variation Average return

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