Monthly Stock Returns for Company A Monthly Stock Returns for Company B Mean Sta

Question

Monthly Stock Returns for Company A Monthly Stock Returns for Company B Mean Standard Error Median Mode Standard Deviation Sample Variance Range Minimum Maximum Sum Count 4.50% 1.67% 3.25% #N/A 5.79% 0.34% 17.48% 3.53% 13.95% 53.94% 12 Mean Standard Error Median Mode Standard Deviation Sample Variance Range Minimum Maximum Sum Count 2.06% 1. 60% 2.87% #N/A 5.54% 0.31% 17.70% 9.99% 24.69% 12 A recent graduate is interested in investing in a stock. This individual is particularly interested in retail companies and has been following two companies closely for the past year. In order to decide which stock to invest in, this individual decides to compare monthly returns for both companies over the past year. A table of descriptive statistics is given below. What can be said about Company A regarding risk and average returns in relation to Company B? A. Company A has higher average monthly returns and is relatively more risky than Company B B. Company A has higher average monthly returns and is relatively less risky than Company B C. Company A has lower average monthly returns and is relatively more risky than Company B D. Company A has lower average monthly returns and is relatively less risky than Company B

Explanation / Answer

Company A's average is higher than Company B and so is the standard deviation. Hence,

Company A has higher average monthly returns and is relatively more risky than Company B.

Option A is correct.

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