Problem:
Consider the following annual returns of Estee Lauder and Lowe's Companies:
Compute each stock's average return, standard deviation, and coefficient of variation.
Estee Lowe's
Year Lauder Companies
2006 20.4% -6.0%
2005 -26.0% 16.1%
2004 17.6% 14.2%
2003 49.9% 48.0%
2002 -16.8% -19.0%
Average Return
Standard Deviation
Coefficient of Variation
Which company had a higher average return?
Which company had a lower risk?
Which company is a better risk-adjusted profile?