You’ve observed the following returns on Doyscher Corporation’s stock over the p

Question

You’ve observed the following returns on Doyscher Corporation’s stock over the past five years: –25.2 percent, 13.8 percent, 30.6 percent, 2.4 percent, and 21.4 percent.

What was the arithmetic average return on the stock over this five-year period? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

What was the variance of the returns over this period? (Do not round intermediate calculations. Round your answer to 6 decimal places (e.g., 32.161616).)

What was the standard deviation of the returns over this period? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

You’ve observed the following returns on Doyscher Corporation’s stock over the past five years: –25.2 percent, 13.8 percent, 30.6 percent, 2.4 percent, and 21.4 percent.

Explanation / Answer

1. Average = (-25.2 + 13.8 + 30.6 + 2.4 + 21.4) / 5 = 8.6

2 (a) Variance = {(-25.2 - 8.6)^2 + (13.8 -8.6)^2 + (30.6 - 8.6)^2 + (2.4 - 8.6)^2 + (21.4 - 8.6)^2} / 5

= (1142.44 + 27.04 + 484 + 38.4 + 163.84) / 5

= 1855.72 / 5 = 371.14

(b) Standard Deviation = Sqrt(Variance) = Sqrt(371.15) = 19.26

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