Q5: You’ve observed the following returns on Doyscher Corporation’s stock over t
ID: 2710290 • Letter: Q
Question
Q5:
You’ve observed the following returns on Doyscher Corporation’s stock over the past five years: –25.2 percent, 13.8 percent, 30.6 percent, 2.4 percent, and 21.4 percent.
Requirement 1:
What was the arithmetic average return on the stock over this five-year period? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)
Arithmetic average return: 8.60 % I know this one..
Requirement 2:
(a)
What was the variance of the returns over this period? (Do not round intermediate calculations. Round your answer to 6 decimal places (e.g., 32.161616).)
Variance:
(b)
What was the standard deviation of the returns over this period? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)
Standard deviation %
Explanation / Answer
2)
AR = 8.60%
Year
Return( R)
D=R- ER
D^2
1
-25.20%
-33.800%
0.114244
2
13.80%
5.200%
0.002704
3
30.60%
22.000%
0.0484
4
2.40%
-6.200%
0.003844
5
21.40%
12.800%
0.016384
Total
0.185576
Variance = Sum of D^2 / (n-1)
= 0.185576/(5-1)
=0.046394
b) Standard Deviation = variance ^0.50
= 0.046394^0.50
= 21.54%
Year
Return( R)
D=R- ER
D^2
1
-25.20%
-33.800%
0.114244
2
13.80%
5.200%
0.002704
3
30.60%
22.000%
0.0484
4
2.40%
-6.200%
0.003844
5
21.40%
12.800%
0.016384
Total
0.185576
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