Question

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 round intermediate calculations and round your answer to 5 decimal places, e.g., 32.16161.)

Variance           

b-2 What was the standard deviation of the company's stock returns over this period? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Standard deviation            %

Answer 1

Average = sum of returns/no. of returns

X - Average return

x - return in each state of economy

n - number of observations

Std dev = sqrt(variance)

Year	Return	Deviation = (Stock return-Average return)	Squared deviation
1	19%	0.08	0.007056
2	-13%	-0.24	0.055696
3	16%	0.05	0.002916
4	21%	0.10	0.010816
5	10%	-0.01	0.000036
		Sum of squared deviations	0.077
Average Return	0.1060	variance = sum of squared deviation/(n-1)	0.019130
		std dev = sqrt(Variance)	0.138