Question

Assume stock A’s recent 5-year return is 8%, 5%, -2%, 6% and 5%. What is the standard error of stock A using the information in the past 5 years? (Show all work)

To continue from the question above, now there is another stock, stock B, that has an expected return of 4.60% and a standard deviation of 3.20%. Which one would you prefer?

A. Stock A

B. Stock B

C. Cannot tell

Continuing the previous questions above, now there is another stock, stock C, that has an expected return of 5.20% and a standard deviation of 4.75%. Among stock A and stock C, which one would you prefer?

A. Stock A

B. Stock C

C. Cannot tell

Answer 1

refer below solution, and please give thumbs up if you understood, all the best!

stock having lower co efficient of variation is most preferred.

1.Stock B is preferable, because it comparatively provide lower Coefficient of variation (69.57%).

2. Stock A is preferable, because it comparatively provide lower Coefficient of variation (76.82%).