Activity Sheet 2.

1 in FM 207 Investment & Portfolio Management

Name: Dollygay Bayombong BSBA FM- Date: 01/30/2022

3B Class Schedule: TTH 1:00-2:30

Instructions:

Problem Solving.

a. AMT = 0.054 or 5.4%

AMB = 𝟎. 𝟎𝟏𝟔 𝐨𝐫 𝟏. 𝟔%

Most desirable stock Stock T

b. Standard Deviation (σ of T ) = 0.11467 or 11.467%

Standard Deviation (σ of B ) = 0.05681 or 5.681%

Most preferable stock Stock B

 c. CVT = 2.123

CVB = 3.5513
Most preferable stock Stock T

d. GMT = 0.04757 or 4.757%

GMB = 0.01435 or 1.435%

Stock T has more variability than stock B

Use the space below for your solution. Copy your correct answer in the space provided above.

∑HPY
A. AMҭ = n

[(0.19 + 0.08 − 0.12 − 0.03 + 0.15)]

=
5
0.07
=
5
= 𝟎. 𝟎𝟓𝟒 𝐨𝐫 𝟓. 𝟒%

∑HPY
AMв =
n

[(0.08 + 0.03 − 0.09 + 0.02 + 0.04)]

=
5
0.08
=
5
= 𝟎. 𝟎𝟏𝟔 𝐨𝐫 𝟏. 𝟔%

B. Standard Deviation = √∑ᶯᵢ =1 𝑃𝑖 [𝑅𝑖 − 𝐸(𝑅𝑖)]2

Standard Deviation (ơ of T) = (0.19-0.54)² + (0.08-0.54)² + (-0.12-0.54)² + (0.03-0.54)² +
0.15-0.54)²
 =0.01850 + 0.00068 + 0.03028 + 0.00706 + 0.00922

=0.06574

0.06754
= 5

ơ² = 0.01315

ơ ҭ = √0.01314

ơҭ = 0.11467 or 11.467%

Standard Deviation (ơ of B)= (0.08-0.016)² + (0.03-0.016)² + (-0.09-0.016)² + (0.02-

0.016)² + (0.04-0.016)²

=0.00410 + 0.00020 + 0.01124 + 0.00002 + 0.00058

=0.01614

0.01614
=
5
ơ² = 0.00323

ơв = √0.00323

ơв = 0.05681 or 5.681%

𝑆𝑡𝑎𝑛𝑑𝑎𝑟𝑑 𝐷𝑒𝑣𝑖𝑎𝑡𝑖𝑜𝑛 𝑜𝑓 𝑅𝑒𝑡𝑢𝑟𝑛𝑠

C. Coefficient of Variation= 𝐸𝑥𝑝𝑒𝑐𝑡𝑒𝑑 𝑅𝑎𝑡𝑒 𝑜𝑓 𝑅𝑒𝑡𝑢𝑟𝑛

.11466
CVҭ = .054

= 2.123

.05682
CVв = 0.016

= 3.5513
D. Geometric Mean= [πHPR] ¹/n-1
GMᵀ= [ (1.19) (1.08) (0.08) (0.97) (1.15) ] ¹/₅-1

= [1.26160] ¹/₅-1

=1.04757-1

=0.04757 or 4.757%

GMв = [ (1.08) (1.03) (0.91) (1.02) (1.04) ] ¹/₅-1

=[1.07383] ¹/₅-1

=1.01435-1

= 0.01435 or 1.435%