You find a certain stock that had returns of 13 percent, 20 percent, 21 percent,

Question

You find a certain stock that had returns of 13 percent, 20 percent, 21 percent, and 12 percent for four of the last five years. The average return of the stock over this period was 9.3 percent. What was the stock’s return for the missing year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place, e.g., 32.1.) Stock’s return % What is the standard deviation of the stock’s returns? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Standard deviation %

Explanation / Answer

9.3 = (13-20+21+12+X)/5

9.3*5 = 26+X

46.5-26 = X

X = 20.50%

Standard Deviation = square root of (summation of (x-mean)^2/n)

Yr x x-9.3 (x-9.3)^2 1         13.00                  3.70                      13.69 2      (20.00)             (29.30)                    858.49 3         21.00                11.70                    136.89 4         12.00                  2.70                        7.29 5         20.50                11.20                    125.44                1,141.80 Standard Deviation = square root of (1141.80)/5 15.11

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