Question

The table below shows annual returns for stocks of companies X and Y. Calculate the arithmetic average returns. In addition, calculate their variances, as well as their standard deviations.

  

	Returns
Year	X	Y
1	7 %	22 %
2	25	43
3	14	-9
4	-15	-23
5	16	51

   

Requirement 1:
(a)	The arithmetic average return of company X's stock is:
	(Click to select)  7.61%  10.62%  9.40%  11.75%  11.47%

   

(b)	The arithmetic average return of company Y's stock is:
	(Click to select)  20.50%  16.80%  13.61%  21.00%  18.98%

  

Requirement 2:
(a)	The variance of company X's stock returns is: (Do not round intermediate calculations.)
	(Click to select)  0.018411  0.022730  0.022360  0.027950  0.028412

   

(b)	The variance of company Y's stock returns is: (Do not round intermediate calculations.)
	(Click to select)  0.129150  0.095996  0.083689  0.119995  0.103320

  

Requirement 3:
(a)	The standard deviation of company X's stock returns is: (Do not round intermediate calculations.)
	(Click to select)  14.85%  18.85%  15.08%  12.21%  16.72%

   

(b)	The standard deviation of company Y's stock returns is: (Do not round intermediate calculations.)
	(Click to select)  30.98%  26.04%  34.64%  32.14%  40.18%

Answer 1