value: 6.00 points Consider the following annual returns of Molson Coors and Int
ID: 2716255 • Letter: V
Question
value: 6.00 points Consider the following annual returns of Molson Coors and International Paper: Molson Coors International Paper Year 1 21.3 % 5.5 % Year 2 9.4 18.5 Year 3 41.5 0.3 Year 4 8.9 27.6 Year 5 17.2 12.1 Compute each stock’s average return, standard deviation, and coefficient of variation. (Round your answers to 2 decimal places.) Molson Coors International Paper Average return % % Standard deviation % % Coefficient of variation Which stock appears better? International Paper Molson Coors
Explanation / Answer
Molson Coors
Average return = 12.34%
Variance = Sum of (Return - Average return)^2 / (n-1)
Variance = 1877.97/(5-1)
Variance = 469.49
Standard deviation = Square root of Variance
Standard deviation = 469.49^(1/2)
Standard deviation = 21.67%
Coefficient of variation = Standard deviation/Average return
Coefficient of variation = 21.67/12.34
Coefficient of variation = 1.76
International Paper
Average return = 0.44%
Variance = Sum of (Return - Average return)^2 / (n-1)
Variance =1279.79/(5-1)
Variance = 319.95
Standard deviation = Square root of Variance
Standard deviation = 319.95^(1/2)
Standard deviation = 17.89%
Coefficient of variation = Standard deviation/Average return
Coefficient of variation = 17.89/0.44
Coefficient of variation = 40.66
Which stock appears better?
Molson Coors is better as its Coefficient of variation is lower than International Paper
Molson Coors Year Return (Return - Average return) (Return - Average return)^2 1 21.30 8.96 80.28 2 -9.4 (21.74) 472.63 3 41.5 29.16 850.31 4 -8.9 (21.24) 451.14 5 17.2 4.86 23.62 Total return 61.70 1,877.97 Average Return =Total return/5 12.34Related Questions
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