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Florida Company (FC) and Minnesota Company (MC) are both service companies. Their stock returns for the past three years were as follows: FC: −5 percent, 15 percent, 20 percent; MC: 8 percent, 8 percent, 20 percent. Calculate the mean return for each company.

Answer :

Using the mean concept, it is found that:

  • The mean return for Florida Company is 10%.
  • The mean return for Minnesota Company is 12%.

The mean of a data-set is given by the sum of all observations divided by the number of observations.

For Florida Company(FC):

  • 3 returns, of -5%, 15% and 20%.

Thus, the mean is:

[tex]M = \frac{-5 + 15 + 20}{3} = \frac{30}{3} = 10[/tex]

The mean return for Florida Company is 10%.

For Minnesota Company(MC):

  • 3 returns, of 8%, 8% and 20%.

Thus, the mean is:

[tex]M = \frac{8 + 8 + 20}{3} = \frac{36}{3} = 12[/tex]

The mean return for Minnesota Company is 12%.

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