Question

2.The rates of return on Cherry Jalopies, Inc., stock over the last five years were 24 percent, 11 percent, −6 percent, 7 percent, and 10 percent. Over the same period, the returns on Straw Construction Company’s stock were 16 percent, 23 percent, −5 percent, 3 percent, and 15 percent.

.Calculate the variances and the standard deviations for Cherry and Straw. (Do not round intermediate calculations. Enter your variance as a decimal rounded to 5 decimal places. Enter your standard deviat

	Cherry Straw Variance Standard deviation % %

Answer 1

Cherry Jalopies, Inc
YEAR	RETURN	(X -Average Return of X)^2
1	24	219.040000
2	11	3.240000
3	-6	231.040000
4	7	4.840000
5	10	0.640000
Total	46	458.800000
Average Return =	Total Return / NO of years
	46 / 5
	9.2
Variance =	sum of (X -Average Return of X)^2 / no of years
	458.8 / 5
	91.76000
Standard Deviation =	Square root of Variance
	Square root of 91.76
	9.58

Straw Construction Company
YEAR	RETURN	(X -Average Return of X)^2
1	16	31.360000
2	23	158.760000
3	-5	237.160000
4	3	54.760000
5	15	21.160000
Total	52	503.200000
Average Return =	Total Return / NO of years
	52 /5
	10.4
Variance =	sum of (X -Average Return of X)^2 / no of years
	503.2 / 5
	100.64000
Standard Deviation =	Square root of Variance
	Square root of 100.64
	10.03

	Cherry		Straw
Variance	91.76000		100.64000
Standard deviation	9.58	%	10.03	%