Use the following returns for X and Y. Returns Year X Y 1 14 % 32 % 2 – 21 – 5 3

Question

Use the following returns for X and Y. Returns Year X Y 1 14 % 32 % 2 – 21 – 5 3 17 17 4 9 – 12 5 23 45 Requirement 1: Calculate the average returns for X and Y. (Do not round intermediate calculations. Enter your answers as a percentage rounded to 2 decimal places (e.g., 32.16).) Average returns X % Y % Requirement 2: Calculate the variances for X and Y. (Do not round intermediate calculations. Enter your answers as a percentage rounded to 6 decimal places (e.g., 32.161616).) Variances X Y Requirement 3: Calculate the standard deviations for X and Y. (Do not round intermediate calculations. Enter your answers as a percentage rounded to 2 decimal places (e.g., 32.16).) Standard deviations X % Y %

Explanation / Answer

Year Return X=Rx Return Y=Ry (Rx-average Return)^2 (Ry-average Return)^2                                    1 14.00% 32.00%              0.003136                   0.02789                                    2 -21.00% -5.00%              0.086436                   0.04121                                    3 17.00% 17.00%              0.007396                   0.00029                                    4 9.00% -12.50%              0.000036                   0.07728                                    5 23.00% 45.00%              0.021316                   0.08821 Total = 42.00% 76.50%              0.118320                   0.23488 Average Return= 8.40% 15.30%                                0 Population Variance =Sum/5                0.02366                   0.04698 Population Std Deviation= Sq Root Variance= 15.38% 21.67% Sample Variance =Sum/4=              0.029580                 0.058720 Sample Std Deviation =SqRoot Variance 17.20% 24.23%

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