Fin. 350
Submitted by: Submitted by nglenn2002
Views: 534
Words: 600
Pages: 3
Category: Business and Industry
Date Submitted: 12/13/2012 08:24 PM
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1. From the information below, compute the average annual return, | | | | | | |
the variance, standard deviation, and coefficient of variation for | | | | | | | |
each asset. | | | | | | | | | | | |
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Asset Annual Returns | | | | | | | | | |
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A 5%, 10%, 15%, 4% | | | | | | | | | |
B -6%, 20%, 2%, -5%, 10% | | | | | | | | |
C 12%,15%, 17% | | | | | | | | | |
D 10%, -10%,20%, -15%,8%, -7% | | | | | | | | |
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ANSWER | | | | | | | | | | | |
| Annual Returns | | | | | | | | |
Asset | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | | Average Returns | Variance | Standard Deviation | COV |
A | 5% | 10% | 15% | 4% | | | | 9% | 0.26% | 5.07% | 0.596 |
B | -6% | 20% | 2% | -5% | 10% | | | 4% | 1.19% | 10.92% | 2.599 |
C | 12% | 15% | 17% | | | | | 15% | 0.06% | 2.52% | 0.172 |
D | 10% | -10% | 20% | -15% | 8% | -7% | | 1% | 1.86% | 13.65% | 13.653 |
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2. Based upon your answers to question 1, which asset appears riskiest | | | | | | |
based on standard deviation? Based on coefficient of variation? | | | | | | | |
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ANSWER | | | | | | | | | | | |
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Higher standard deviation indicates higher risk, and same with Coefficient of Variation | | | | | | |
D has the highest risk based on both Standard Deviation (13.65% ) and COV (13.65) 5. RCMP, Inc. shares rose 10 percent in value last year while the | |...
