Given six years of percentage return of Stock A and Stock B, identify the expected return, and risk of each instrument. Assume that each year, has equal chances of reoccurrence. Stock A Stock B 20X1 10 20 20X2 -15 -20 20X3 20 -10 20X4 25 30 20X5 -30 -20 20X6 20 60 Which of the two stocks is riskier? Why? Which of the stocks is expected to yield a higher return? Why? Where will you invest?
Given six years of percentage return of Stock A and Stock B, identify the expected return, and risk of each instrument. Assume that each year, has equal chances of reoccurrence. Stock A Stock B 20X1 10 20 20X2 -15 -20 20X3 20 -10 20X4 25 30 20X5 -30 -20 20X6 20 60 Which of the two stocks is riskier? Why? Which of the stocks is expected to yield a higher return? Why? Where will you invest?
Chapter8: Risk And Rates Of Return
Section: Chapter Questions
Problem 17PROB
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Problem 3:
Given six years of percentage return of Stock A and Stock B, identify the expected return, and risk of each instrument. Assume that each year, has equal chances of reoccurrence.
|
Stock A |
Stock B |
20X1 |
10 |
20 |
20X2 |
-15 |
-20 |
20X3 |
20 |
-10 |
20X4 |
25 |
30 |
20X5 |
-30 |
-20 |
20X6 |
20 |
60 |
- Which of the two stocks is riskier? Why?
- Which of the stocks is expected to yield a higher return? Why?
- Where will you invest?
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