Question

8.

A stock had returns of 16.11 percent, 23.82 percent, −11.53 percent, and 9.58 percent over four of the past five years. The arithmetic average return over the five years was 13.16 percent. What was the stock return for the missing year?

9. A stock had returns of 17.59 percent, −7.11 percent, and 23.81 percent for the past three years. What is the standard deviation of the returns?

Answer 1

post one question at a time.

8.given arithmetic mean for returns over 5 years = 13.16%.

let the return of missing year be x.

=>(16.11+23.82-11.53+9.58+x) / 5 =13.16%

=>37.98 %+x = 65.80%

=>x = 65.80% - 37.98%

=>x= 27.82%..

Stock return of missing year = 27.82%.

9. standard deviation

first let us know the arithmetic mean

=> (17.59 -7.11+23.81) / 3

=>11.43%.

now,

return	return - mean	(return - mean)^2
17.59	6.16	37.9456
-7.11	-18.54	343.7316
23.81	12.38	153.2644
	total	534.9416

sd= [total of (return - mean)^2 / n]

here,

n = number of observations =3

=>sd =[534.9416/3]

=>13.35.

Standard deviation of the returns = 13.35.

answered by: anonymous