You presently own stock that you purchased one year ago. Your nominal return on the stock for the past year was15%. You calculate your real return on investment as 11.50 %. According to the "Fisher Effect" formula, the rate ofinflation must have been0.23%3.50%3.14%O 7.67%O 28.00%

Fisher effect tells that how much the inflation and how much is impact inflation on interest rate.

Answered: You presently TOCK 15%. You calculate…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 17P

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During the past five years, you owned two stocks that had the following annual rates of return: Year Stock T Stock B 1 0.19 0.08 2 0.08 0.03 3 −0.12 −0.09 4 −0.03 0.02 5 0.15 0.04 Compute the arithmetic mean annual rate of return for each stock. Which stock is most desirable by this measure? Compute the standard deviation of the annual rate of return for each stock. (Use Chapter 1 Appendix if necessary.) By this measure, which is the preferable stock? Compute the coefficient of variation for each stock. (Use the Chapter 1 Appendix if necessary.) By this relative measure of risk, which stock is preferable? Compute the geometric mean rate of return for each stock. Discuss the difference between the arithmetic mean return and the geometric mean return for each…

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You presently TOCK 15%. You calculate your real return on investment as 11.50 %. According t inflation must have been O 0.23% 3.50% 3.14% 7.67% 39.00Kr