question archive You’ve observed the following returns on Crash-n-Burn Computer’s stock over the past five years: 8 percent, −15 percent, 19 percent, 31 percent, and 21 percent

You’ve observed the following returns on Crash-n-Burn Computer’s stock over the past five years: 8 percent, −15 percent, 19 percent, 31 percent, and 21 percent

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You’ve observed the following returns on Crash-n-Burn Computer’s stock over the past five years: 8 percent, −15 percent, 19 percent, 31 percent, and 21 percent.

a. What was the arithmetic average return on the company's stock over this five-year period?

b-1. What was the variance of the company's returns over this period?

b-2. What was the standard deviation of the company's returns over this period?

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Answer:

Arithmetic Return = (8% - 15% + 19% + 31% + 21%)/ 5

Arithmetic Return = 12.80%

Variance = ((8% - 12.80%)2 + (-15% - 12.80%)2 + (19% - 12.80%)2 + (31% - 12.80%)2 +  (21% - 12.80%)2)/ 4

Variance = 0.03082

SD = Variance0.5

SD = 0.030820.5

SD = 17.56%

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