Calculate the average return and standard deviation of this portfolio whose annu

Question

Calculate the average return and standard deviation of this portfolio whose annual returns for a 20-year period are shown below:

Year Return
1          57.38%

2          25.48%

3          23.46%

4          43.46%

5          39.88%

6          13.88%

7          28.01%

8          39.67%

9         -6.67%

10        24.66%

11        6.85%

12        -9.30%

13        22.87%

14       10.18%

15        -21.56%

16         44.63%

17         23.35%

18         20.98%

19         3.11%

20          34.46%

(Note to Chegg Expert: Please show your work so that I understand how to solve this)

Explanation / Answer

Year Annual return Mean return Annual Return- Mean Return (Annual Return- Mean Return)^2 1 57.38 21.239 36.141 1306.171881 2 25.48 21.239 4.241 17.986081 3 23.46 21.239 2.221 4.932841 4 43.46 21.239 22.221 493.772841 5 39.88 21.239 18.641 347.486881 6 13.88 21.239 -7.359 54.154881 7 28.01 21.239 6.771 45.846441 8 39.67 21.239 18.431 339.701761 9 -6.67 21.239 -27.909 778.912281 10 24.66 21.239 3.421 11.703241 11 6.85 21.239 -14.389 207.043321 12 -9.30 21.239 -30.539 932.630521 13 22.87 21.239 1.631 2.660161 14 10.18 21.239 -11.059 122.301481 15 -21.56 21.239 -42.799 1831.754401 16 44.63 21.239 23.391 547.138881 17 23.35 21.239 2.111 4.456321 18 20.98 21.239 -0.259 0.067081 19 3.11 21.239 -18.129 328.660641 20 34.46 21.239 13.221 174.794841 Total 424.78 7552.17678 n= number of years= 20 years Mean Return = 424.78/20 Mean Return = 21.239 Standard Deviation = (((Annual Return- Mean Return)^2)/(n-1))^(1/2) Standard Deviation = (7552.17678/(20-1))^(1/2) Standard Deviation = 19.94%

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