Question

You are a financial manager and have observed the following returns on Kam Steel Corporation stock...

You are a financial manager and have observed the following returns on Kam Steel Corporation stock over the past ten years: 7%, −12%, 11%, -38%, 14%, 22%, -26%, 18%, 20%, and 23%. Based on the given information, please answer questions a and b.

a) What was the arithmetic average return on Kam Steel Corporation stock over this 10-year period?

b) What was the variance of Kam Steel Corporation stock's returns over this period? The standard deviation?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

a)arithmetic average return = 3.90%

b) variance = 0.042149

  The standard deviation = 20.53%

 Deviation
Sl.No Returns[%] return-expected return Deviation^2
1 7 3.1 9.61
2 -12 -15.9 252.81
3 11 7.1 50.41
4 -38 -41.9 1755.61
5 14 10.1 102.01
6 22 18.1 327.61
7 -26 -29.9 894.01
8 18 14.1 198.81
9 20 16.1 259.21
10 23 19.1 364.81
39 4214.90
Arthimetic average return 3.9 [Total of returns/ Total observation]
Standard Deviation 20.53% √[sum of deviation^2]/n √4214.90/10
Variance 421.49% Standard deviation^2
or
0.042149
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
You are a financial manager and have observed the following returns on Kam Steel Corporation stock...
You are a financial manager and have observed the following returns on Kam Steel Corporation stock over the past ten years: 7%, −12%, 11%, -38%, 14%, 22%, -26%, 18%, 20%, and 23%. Based on the given information, please answer questions a and b. What was the arithmetic average return on Kam Steel Corporation stock over this 10-year period? What was the variance of Kam Steel Corporation stock's returns over this period? The standard deviation
You’ve observed the following returns on Crash-n-Burn Computer’s stock over the past five years: 4 percent,...
You’ve observed the following returns on Crash-n-Burn Computer’s stock over the past five years: 4 percent, –15 percent, 26 percent, 19 percent, and 14 percent.    What was the arithmetic average return on the company's stock over this five-year period?     What was the variance of the company's returns over this period?     What was the standard deviation of the company’s returns over this period?
9. You’ve observed the following returns on Barnett Corporation’s stock over the past five years: -12...
9. You’ve observed the following returns on Barnett Corporation’s stock over the past five years: -12 percent, 23 percent, 18 percent, 7 percent, and 13 percent What was the arithmetic average return on the stock over this five-year period? What was the variance of the returns over this period? The standard deviation? 10. For problem 9, suppose the average inflation rate over this period was 3.2 percent and the average T-bill rate over the period was 4.3 percent. A What...
9. Calculating Returns and Variability You’ve observed the following returns on Yasmin Corporation’s stock over the...
9. Calculating Returns and Variability You’ve observed the following returns on Yasmin Corporation’s stock over the past five years: 19 percent, −13 percent, 7 percent, 25 percent, and 16 percent. a. What was the arithmetic average return on the company’s stock over this five-year period? b. What was the variance of the company’s stock returns over this period? The standard deviation? 10. Calculating Real Returns and Risk Premiums In Problem 9, suppose the average inflation rate over this period was...
You’ve observed the following returns on SkyNet Data Corporation’s stock over the past five years: 19...
You’ve observed the following returns on SkyNet Data Corporation’s stock over the past five years: 19 percent, 24 percent, 11 percent, −9 percent, and 13 percent.      a.What was the arithmetic average return on the company’s stock over this 5-year period?      b.What was the variance of the company’s returns over this period? The standard deviation? Suppose the average inflation rate over this period was 3.6 percent and the average T-bill rate over the period was 4.1 percent.      c.What...
You’ve observed the following returns on Barnett Corporation’s stock over the past five years: –27.3 percent,...
You’ve observed the following returns on Barnett Corporation’s stock over the past five years: –27.3 percent, 15.2 percent, 33.4 percent, 3.1 percent, and 22.1 percent. What was the arithmetic average return on the stock over this five-year period? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Arithmetic average return % = What was the variance of the returns over this period? (Do not round intermediate calculations and round your...
You’ve observed the following returns on Yasmin Corporation’s stock over the past five years: 19 percent,...
You’ve observed the following returns on Yasmin Corporation’s stock over the past five years: 19 percent, –13 percent, 16 percent, 21 percent, and 10 percent. a. What was the arithmetic average return on the company's stock over this five-year period? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place, e.g., 32.1.) Average return            {C} {C}{C} % b-1 What was the variance of the company's stock returns over this period? (Do not...
You find a certain stock that had returns of 14 percent, -11 percent, 21 percent, and...
You find a certain stock that had returns of 14 percent, -11 percent, 21 percent, and 22 percent for four of the last five years. The average return of the stock over this period was 12 percent. What was the stock's return for the missing year? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places.) What is the standard deviation of the stock's returns? ( DO not round intermediate calculations and enter...
You have observed the following returns over time: Year: Stock X: Market: 2014 18% 14% 2015...
You have observed the following returns over time: Year: Stock X: Market: 2014 18% 14% 2015 6% 8% 2016 23% 12% Assume that the risk-free rate is 6% and the market risk premium is 5%. a) What are the expected rates of return on Stock X and the market? b) What is the standard deviation on Stock X and the market? c) What is the Beta for Stock X given a correlation to the market of 0.8117? Is Stock X...
You’ve observed the following returns on Yasmin Corporation’s stock over the past five years: 18 percent,...
You’ve observed the following returns on Yasmin Corporation’s stock over the past five years: 18 percent, –3 percent, 16 percent, 11 percent, and 10 percent. Suppose the average inflation rate over this period was 3.2 percent and the average T-bill rate over the period was 5.5 percent. a. What was the average real return on the company's stock? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Average real return      ...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT