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: 3 percent, -8 percent, 27 percent, 21 percent, and 17 percent.

Requirement 1:

What was the arithmetic average return on Crash-n-Burn’s stock over this five year period?

A.)13.08%

B.)9.72%

C.)14.28%

D.)12.00%

E.)15.00%

Requirement 2:

(a) What was the variance of Crash-n-Burn’s returns over this period? (Do not round intermediate calculations.)

A.)0.02030

B.)0.01624

C.)0.02142

D.)0.01644

E.)0.01847

(b) What was the standard deviation of Crash-n-Burn’s returns over this period? (Do not round intermediate calculations.)

A.)12.74%

B.)14.25%

C.)14.64%

D.)11.54%

E.)16.95%

A.)13.08%

B.)9.72%

C.)14.28%

D.)12.00%

E.)15.00%

Explanation / Answer

Enter the yearly returns of Crash-n-Burn Computer in an excel sheet and calculate the required as below

1. Average Return = AVERAGE(A1:A5) = 12.00%

So option D is correct

2. Variance = VAR.S(A1:A5) = 0.02030

So option A is correct

3. Standard Deviation = STDEV.S(A1:A5) = 14.25%

So option B is correct

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