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.

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.)

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.)

What was the standard deviation of Crash-n-Burn’s returns over this period? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

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.

Explanation / Answer

avarage return = 20%-12%+17%+20%+10%/5= 11%

variance = (0.2-0.11)2+(-0.12-0.11)2+(0.17-0.11)2+(0.20-0.11)2+(0.10-0.11)2

   = 0.0728

standard deviation = (0.0728)1/2

=0.2698= 26.98%

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