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A stock had returns of 14.95 percent, 19.65 percent, −17.85 percent, 12.65 percent, and 27.58 percent...

A stock had returns of 14.95 percent, 19.65 percent, −17.85 percent, 12.65 percent, and 27.58 percent for the past five years. What is the variance of the returns

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Answer #1

Average return=Total return/Total time period

=(14.95+19.65-17.85+12.65+27.58)/5=11.396%

Return (Return-Average return)^2
14.95 (14.95-11.396)^2=12.630916
19.65 (19.65-11.396)^2=68.128516
-17.85 (-17.85-11.396)^2=855.328516
12.65 (12.65-11.396)^2=1.572516
27.58 (27.58-11.396)^2=261.921856
Total=1199.58232%

Standard deviation=[Total (Return-Average return)^2/(Time period-1)]^(1/2)

=[1199.58232/(5-1)]^(1/2)

=[1199.58232/4]^(1/2)

=17.32%(Approx)

Variance=Standard deviation^2

=299.9%(or 0.02999 approx)

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