\" Q2) A stock had the following annual returns: 10.48%, 07.32% , -24.45%, and 1

Question

" Q2) A stock had the following annual returns: 10.48%, 07.32% , -24.45%, and 11.92%. What is the stock's: a) expected return? (1 point)" What is the stock's: b) variance? (1 point) What is the stock's: c) standard deviation? (1 point)

Q4) A stock has an expected return of 06.38% and a standard deviation of 12.61%. For this stock, what are the:

       a) Upper range of 68% confindence interval (0.5 points)        b) Lower range of 68% confindence interval: (0.5 points)        c) Upper range of 95% confindence interval: (0.5 points)        d) Lower range of 95% confindence interval: (0.5 points)        e) Upper range of 99% confindence interval: (0.5 points)        f) Lower range of 99% confindence interval: (0.5 points)

Explanation / Answer

expected return = ( 0.1048 + 0.0732 - 0.2445 + 0.1192) / 4

expected return = 0.13175 or 13.175%

Variance = [( 0.1048 - 0.13175 )2 + ( 0.0732 - 0.13175 )2 + ( -0.2445 - 0.13175 )2 + ( 0.1192 - 0.13175 )2] 4 - 1

Variance = [ 0.000726 + 0.003428 + 0.141564 + 0.000158] / 3

Variance = 0.048625

Standard deviation is square root of variance

Square root of 0.048625 is 0.220512

Standard deviation is 22.0512%

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