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: 12 percent, –9 percent, 20 percent, 17 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 ________ % 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? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Standard deviation _________%

Explanation / Answer

a)To find the average return, we sum all the returns and

divide by the number of returns,

so: Average return = (0.12 – 0.09 + 0.20 + 0.17 + 0.10)/5 = 0.10, or 10%

b)

Variance =1/4*((0.12-0.1)^2+(-0.09-0.1)^2+(0.2-0.1)^2+(0.17-0.1)^2+(0.1-0.1)^2)

         = 0.01285

Standard deviation = 0.01285^(1/2) = 0.11336 = 11.336%

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.