1. The stocks on ABC Company and XYZ Company have the following returns over the last...

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Finance

1. The stocks on ABC Companyand XYZ Company have the following returns over the last fouryears.
Year
ABC returns
XYZ returns
1
-0.2
0.05
2
0.5
0.09
3
0.3
-0.12
4
0.1
0.2
a.   Calculate theaverage return onABC.                                                              (1 mark)
b.   Calculate theaverage return onXYZ.                                                              (1 mark)
c.   Calculate thevariance and standard deviation on the ABC returns.  (2.5 marks)
d.   Calculate thevariance and standard deviation on the XYZ returns.  (2.5 marks)
e.   Using thecoefficient of variation (standard deviation/average return) tocompare the two stocks, which stock is preferable?

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YearABC returnsXYZ returns10200520500930301240102a Average return on ABC 020503014 0175Average return of ABC 0175b Average return on XYZ 005009012024 0055Average return on XYZ 0055c Variance is calculated See Answer

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Transcribed Image Text

1. The stocks on ABC Companyand XYZ Company have the following returns over the last fouryears. YearABC returnsXYZ returns1-0.20.0520.50.0930.3-0.1240.10.2a. Calculate theaverage return onABC. (1 mark)b. Calculate theaverage return onXYZ. (1 mark)c. Calculate thevariance and standard deviation on the ABC returns. (2.5 marks)d. Calculate thevariance and standard deviation on the XYZ returns. (2.5 marks)e. Using thecoefficient of variation (standard deviation/average return) tocompare the two stocks, which stock is preferable?

Year	ABC returns	XYZ returns
1	-0.2	0.05
2	0.5	0.09
3	0.3	-0.12
4	0.1	0.2