Question

Consider the following realized annual returns:

Year	Stock A	Index
2000	23.6%	47.3%
2001	24.7%	27.7%
2002	30.5%	86.9%
2003	9.0%	23.1%
2004	-2.0%	0.2%
2005	-17.3%	-3.2%
2006	-24.3%	-27.0%
2007	32.2%	27.9%
2008	4.4%	-5.1%
2009	7.4%	-11.3%

a. Calculate the average of annual returns of the index.

a. The average of annual returns of the index is ????%. (round to two decimals)

b. Compute the standard deviation of annual returns of the index.

b. The standard deviation of annual returns of the index is ????%. (round to two decimals)

c. Compute the lower bound of the 95% confidence interval for annual returns of the index. Use the exact value from Excel, not an approximation.

c. The lower bound of the 95% confidence interval of annual returns of the index is ???%. (round to one decimal)

d. Compute the geometric mean of annual returns of the index.

d. The geometric mean of annual returns of the index is ????%. (round to two decimals)

Answer 1

c)