The Following Gives Summary Measures for Google and Apple for 2005-2010

question 59

Essay

The following gives summary measures for Google and Apple for 2005-2010. a.Which fund had the higher arithmetic average return?
b.Which fund was riskier over this time period?
c.Given a risk-free rate of 1%,which fund has the higher Sharpe ratio?What does this imply?

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Definitions:

Inventory

A complete list of items such as property, goods in stock, or the contents of a building.

Times Interest Earned Ratio

The times interest earned ratio is a financial metric used to measure a company's ability to meet its debt obligations by comparing its income before interest and tax (EBIT) to its interest expenses.

Interest Expense

The cost incurred by an entity for borrowed funds over a period of time.

Inventory Turnover Ratio

A measure of how often a company sells and replaces its stock of goods during a period, calculated as cost of goods sold divided by average inventory.