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 20.50 % 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 % The stock is 20.50 but I got 15.11 for standard deviation is wrong not 15.11

Explanation / Answer

As calculated the Stocks return for the missing year = 20.50%

The Standard Deviation of the Stock's Returns is =

S.D. = SqRt [(dx2 / n) - (dx / n)2 ]

=SqRt [(1826.25 / 5) - (-58.50 / 5)2 ]

= SqRt [365.25 - 135.49 ]

= 15.16

Returns dx dx2 13 -8 64 -20 -41 1681 21 0 0 12 -9 81 20.50 -0.50 0.25 n=5 total = -58.50 total = 1826.25

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