Van Horne Pharmaceutical\'s annual stock returns over the previous five years ar
ID: 2784538 • Letter: V
Question
Van Horne Pharmaceutical's annual stock returns over the previous five years are shown below.
Year Stock Return
1 11.8%
2 -81.7%
3 24%
4 39.8%
5 59%
An analyst wants to publish a forecast of next years stock return and is using this data to guide that guess. What is your best guess for the return in an average, or typical, year?
10.82%
10.9%
11.3%
10.74%
10.58%
On average, how much has an investment earned per year in Van Horne's stock? In other words, what is the average compound return for Van Horne's stock?
-10.82%
-5.73%
-13.92%
-11.81%
-9.43%
If an investor put $500 into Van Horne's stock at time period 0, how much would that investment be worth at the end of these five years?
$334.81
$281.96
$228.74
$274.38
$259.20
What is the standard deviation of Van Horne's annual returns over this five-year period?
52.79%
53.53%
54.53%
54.28%
54.03%
Explanation / Answer
1. average return = (11.8-81.7+24+39.8+59)/5= 10.58%
2.Compounded average return= (1.118*0.183*1.24*1.398*1.59)1/5-1*100= -10.82%
3. worth of investmeny at the end of 5 years= $500*1.118*0.183*1.24*1.398*1.59= $281.96
4.Using BA II plus calculator
Go to stats mode
2nd DATA 2nd CE/C
X01=11.8,X02= -81.7, X03= 24, X04=39.8, X05= 59
2nd STAT
Sx= 54.53%
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