Use the following information to answer Questions 37 - 40. Hacker Corporation\'s

Question

Use the following information to answer Questions 37 - 40.

Hacker Corporation's stock produced returns of 22%, 14%, and -11% over three of the past four years. The arithmetic average for the past four years is 12.5%. What is the standard deviation of the stock's returns for the 4-year period?

14.29%

16.34%

17.08%

15.25%

2 points   

QUESTION 38

Suppose the current T-bill rate is 0.15%. What is the risk premium of owing Hacker Corporation's stock?

12.35%

11.05%

9.15%

-12.85%

2 points   

QUESTION 39

What range of returns would you expect to see 99% of the time?

(-5.67%, 31.67%)

(-36.52%, 61.52%)

(-22.54%, 44.54%)

(-32.37%, 51.37%)

2 points   

QUESTION 40

What is the geometric average return for the 4-year period?

11.53%

10.91%

10.68%

12.97%

14.29%

16.34%

17.08%

15.25%

Explanation / Answer

37.

total return = 4* average return = 4*12.5%=50%

now total return = 22%+14%-11%+N

50%=25%+N

N=25% IS FOR THE 4TH YEAR

use excel function STDEV for standrad deviation as follows:

=stdev(22%,14%,-11%,25%)=16.34%

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