Question

Steele Corp has the following annual returns for the previous four years: -15%, 10%, 25%, 45%.Calculate Steele Corp’s average return, sample variance and sample standard deviation.

Answer 1

Average Return = Summation of X / N

Summation of X => (-15) + 10 + 25 + 45 = 65

N = Number of counts, that is 4

Average Return => 65 / 4 = 16.25

Sample Variance = Summation of (X - Mean of X)^2 / N - 1

Mean of X = 16.25 (Average Return is the mean of X)

Sample Variance = [{(-15) - 16.25} + {10 - 16.25} + {25 - 16.25} + {45 - 16.25}] / (4 - 1)

= 639.5833

Sample Standard Deviation = Square root of Sample Variance

= Square root (639.5833)

= 25.2899

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