Question

company x yielded historical returns of -16.39%, -26.98%, 37.57%, 24.27%, -7.84%, and 6.91%. calculate the standard...

company x yielded historical returns of -16.39%, -26.98%, 37.57%, 24.27%, -7.84%, and 6.91%. calculate the standard deviation of the returns for company x.

Homework Answers

Answer #1

Average return=Total of returns/Total time period

=(-16.39-26.98+37.57+24.27-7.84+6.91)/6

=2.923%(Approx)

Return (Return-Mean)^2
-16.39 (-16.39-2.923)^2=373.0048444
-26.98 (-26.98-2.923)^2=894.2093444
37.57 (37.57-2.923)^2=1200.391511
24.27 (24.27-2.923)^2=455.6801778
-7.84 (-7.84-2.923)^2=115.8493444
6.91 (6.91-2.923)^2=15.89351111
Total=3055.027733%

Standard deviation=[Total (Return-Mean)^2/(Time Period-1)]^(1/2)

which is equal to

=24.72%(Approx).

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