Question

question 6 You have the following historical annual total returns on Terlingua Oil & Gas Exploration:

Year	Annual total return (%)
2001	3%
2002	-4%
2003	12%
2004	15%
2005	-2%
2006	3%
2007	17%
2008	0%
2009	-1%
2010	5%

Calculate the sample standard deviation of annual return.

Do not round at intermediate steps in your calculation. Express your answer in percent. Round to two decimal places. Do not type the % symbol.

Answer 1

Average Return = Sum of returns / Number of periods

=(3%-4%+12%+15%-2%+3%+17%+0%-1%+5%) / 10

= 4.80%

standard deviation = [Sum of Deviation Squared / (Number of Periods -1)]^(1/2)

=[ 491.60/(10-1)]^(1/2)

= 54.62%^(1/2)

Answer = 7.39%

Note:

Probable Return	Deviation ( Probable Return- Expected Return)	Deviation Squared
3	-1.800	3.24
-4	-8.800	77.44
12	7.200	51.84
15	10.200	104.04
-2	-6.800	46.24
3	-1.800	3.24
17	12.200	148.84
0	-4.800	23.04
-1	-5.800	33.64
5	0.200	0.04
	Deviation Squared Total	491.60