Question

Assignment 08 - Risk and Rates of Return Five years of realized returns for CCC are given in the following table. Remember: 1. While CCC was started 40 years ago, its common stock has been publicly traded for the past 25 years. 2. The returns on its equity are calculated as arithmetic returns. 3. The historical returns for CCC for 2012 to 2015 are: 2012 17.50% 2013 11.90% 2014 21.00% 2015 29.40% 2016 9.10% Stock return Given the preceding data, the average realized return on CCC's stock is of CCC's historical returns. Based on this condusion, the The preceding data series represents standard deviation of CCC's historical returns is If investors expect the average realized return from 2012 to 2016 on CCC's stock to continue into the future, its coefficient of variation (CV) will be

Answer 1

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

B Year 2012 2013 2014 2015 Stock Return 17.50% 11.90% 21.00% 29.40% 9.10% 2016 1 Average return of CCC's stock 17.78% 2 The preceding data series represents Sample of CCC's historical returns. 12 3 Standard deviation of CCC's historical return 7.99% 14 15 4 Coefficient of variation (CV) 0.45 18

Cell reference -

Year 3 2012 2013 2014 2015 Stock Return 0.175 0.119 0.21 0.294 0.091 5 7 12016 Average return of CCC's stock =AVERAGE(C3:07) The preceding data series represents Sample of CCC's historical returns. 9 1 10 11 2 12 13 3 14 15 4 Standard deviation of CCC's historical return ESTDEV.S(C3:07) Coefficient of variation (CV) =C13/09

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