You’ve observed the following returns on Crash-n-Burn Computer’s stock over the

Question

You’ve observed the following returns on Crash-n-Burn Computer’s stock over the past five years: 20 percent, –12 percent, 17 percent, 20 percent, and 10 percent. a. What was the arithmetic average return on Crash-n-Burn’s stock over this five-year period? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place, e.g., 32.1.) Average return 11%

b-1 What was the variance of Crash-n-Burn’s returns over this period? (Do not round intermediate calculations and round your answer to 5 decimal places, e.g., 32.16161.)

Variance b-2 What was the standard deviation of Crash-n-Burn’s returns over this period?

Explanation / Answer

Year Return (X) X - X Mean (X - X Mean)^2 1 20% 9% 0.8100% 2 -12% -23% 5.2900% 3 17% 6% 0.3600% 4 20% 9% 0.8100% 5 10% -1% 0.0100% Total 7.2800% Average Return (X Mean) 11% Variance (7.2800/5) 1.46% Standard Deviation [Sqrt(1.46%)] 12.07%

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