P12-9 Calculating Returns and Variability [LO You\'ve observed the following ret
ID: 2822161 • Letter: P
Question
P12-9 Calculating Returns and Variability [LO You've observed the following returns on Crash-n-Burn Computer's stock over the past five years: 4 percent, -9 percent, 30 percent, 21 percent, and 14 percent. Requirement 1: What was the average return on Crash-n-Burn's stock over this five year period? (Click to select) ? Requirement 2: (a) What was the variance of Crash-n-Burn's returns over this period? (Do not round intermediate calculations.) (Click to select) v (b) What was the standard deviation of Crash-n-Burn's returns over this period? (Do not round intermediate calculations.) (Click to select)Explanation / Answer
Average return=Total of returns/Total time period
=(4-9+30+21+14)/5=12%
Standard deviation=[Total (Return-Mean)^2/(Time period-1)]^(1/2)
=[914/(5-1)]^(1/2)
(914/4)^(1/2)
which is equal to
=15.12%(Approx).
Variance=Standard deviation^2
=228.5%
Return (Return-Mean)^2 4 (4-12)^2=64 -9 (-9-12)^2=441 30 (30-12)^2=324 21 (21-12)^2=81 14 (14-12)^2=4 Total=914%Related Questions
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