You’ve observed the following returns on Crash-n-Burn Computer’s stock over the
ID: 2804443 • Letter: Y
Question
You’ve observed the following returns on Crash-n-Burn Computer’s stock over the past five years: 5 percent, -10 percent, 30 percent, 15 percent, and 13 percent.
What was the variance of Crash-n-Burn’s returns over this period? (Do not round intermediate calculations.)
What was the standard deviation of Crash-n-Burn’s returns over this period? (Do not round intermediate calculations.)
Requirement 1: What was the arithmetic average return on Crash-n-Burn’s stock over this five year period?Explanation / Answer
1. arithmetic average return=Total returns/Total time period
=(5-10+30+15+13)/5=10.6%
3
SD=[Total of (Return-Mean)^2/(Time period-1)]^(1/2)
=14.64%(Approx)
2.Variance=SD^2
=214.3%
Return (Return-mean)^2 5 (5-10.6)^2=31.36 -10 (-10-10.6)^2=424.36 30 (30-10.6)^2=376.36 15 (15-10.6)^2=19.36 13 (13-10.6)^2=5.76 Total=857.2%Related Questions
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