From the information below, compute the average annual return, the variance, sta

Question

From the information below, compute the average annual return, the variance, standard deviation, and coefficient of variation for each asset.

ASSET ANNUAL RETURNS
A) 5%, 10%, 15%, 4%
B) -6%, 20%, 2%, -5%, 10%
C) 12%, 15%, 17%
D) 10%, -10%, 20%, -15%, 8%, -7%







3.Recalling the definitions of risk premiums from Chapter 8 and using the Treasury bill return in Table 12.4 as an approximation to the nominal risk-free rate, what is the risk premium from investing in each of the other asset classes listed in Table 12.4?



4.What is the real, or after-inflation, return from each of the asset classes listed in Table 12.4?

Explanation / Answer

A) avg ret =( 5%+ 10%+15%+4%)/4 = 8.5% B) avg ret = -6%+20%+2% -5%+ 10%)/5 = 4.2% C) avg rtet = 12%+ 15% +17% )/3 = 14.6% D) avg ret = 10%-10%+20%-15%+8% -7%)/5 = 1.2%

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