Question

A stock had returns of 18.46 percent, 21.74 percent, −14.90 percent, 9.02 percent, and 28.09 percent...

A stock had returns of 18.46 percent, 21.74 percent, −14.90 percent, 9.02 percent, and 28.09 percent for the past five years. What is the standard deviation of the returns?

2.82%

16.78%

13.43%

20.98%

28.17%

An asset has an average return of 9.87 percent and a standard deviation of 18.84 percent. What range of returns should you expect to see with a 68 percent probability?

−8.97% to 10.77%

−8.97% to 28.71%

−18.39% to 38.13%

−27.81% to 47.55%

−46.65% to 66.39%

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Homework Answers

Answer #1

1)

Year Return of Stock
1 18.46
2 21.74
3 -14.9
4 9.02
5 28.09
Mean return 12.482
Standard deviation 16.78%

Where

Average or Mean = Sum of all observations/Count of all observations
                             
Sample Standard deviation =((∑k=1 to N (observationk – average))/(N-1))^(1/2)    

2)

As per 68 % rule

range = mean+-std dev

=9.87+18.84 to 9.87-18.84

=-8.97 to 28.71

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