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: 10 percent, –11 percent, 18 percent, 19 percent, and 10 percent. a. What was the arithmetic average return on Crash-n-Burn’s stock over this five-year period? (Round your answer 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? (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 and round your final answer to 2 decimal places. (e.g., 32.16)) Standard deviation %

Explanation / Answer

Arithmetic return =(10%+-11%+18%+19%+10%)/5=9.2%

variance =sum of (average return-individual return) for all years

Variance=(9.2%-10%)^2+(9.2%+11%)^2+(9.2%-18%)^2+(9.2%-19%)^2+(9.2%-10%)^2

=0.01457

standard devaiton=variance^0.5

=0.120706=12.07%

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