Answer to Question #181746 in Finance for Catherine

Question #181746

Year return (HPY) of C return (HPY) of F

2016 −18.00% −14.50%

2017 33.00% 21.80%

2018 15.00 % 30.50%

2019 −0.50% −7.60%

2020 27.00% 26.30%

Required

Calculate the geometric rate of return for each stock during the 5-year period. (6mks)

Calculate the standard deviation of returns for each stock. (10mks)

Calculate the coefficient of variation for each stock. (2mks)

If you are a risk-averse investor then, assuming these are your only choices, discuss whether you would prefer to hold Stock C or Stock F. (2mks)



1
Expert's answer
2021-04-20T17:26:54-0400

geometric rate of return for each stock:






The higher the coefficient of variation, the higher the risk is considered, so securities are preferred F


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