You’ve observed the following returns on Crash-n-Burn Computer’s stock over the
ID: 2722895 • Letter: Y
Question
You’ve observed the following returns on Crash-n-Burn Computer’s stock over the past five years: 3 percent, -12 percent, 25 percent, 20 percent, and 15 percent.
12.75%
12.14%
10.20%
11.12%
8.26%
What was the variance of Crash-n-Burn’s returns over this period? (Do not round intermediate calculations.)
0.01788
0.01766
0.02008
0.02207
0.02288
What was the standard deviation of Crash-n-Burn’s returns over this period? (Do not round intermediate calculations.)
What was the arithmetic average return on Crash-n-Burn’s stock over this five year period?12.75%
12.14%
10.20%
11.12%
8.26%
Explanation / Answer
Arthematic mean= 3-12+25+20+15/5=10.2%
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a)Variance= [(0.03-0.102)2+(-0.12-0.102)2+ (0.25-0.102)2+ (0.20-0.102)2+ (0.15-0.102)2]/5
= 0.088280 /5=0.01766
b)Standard deviation= variance
=0.01766
=0.1329
Or 13.29%
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