The last four years of returns for a stock are as follows: Year 1 2 3...

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The last four years of returns for a stock are as follows: Year 1 2 3...

The last four years of returns for a stock are as follows:

Year	1	2	3	4
Return	−4.0%	28%	12%	4.0%

a. What is the average annual return?

b. What is the variance of the stock's returns?

c. What is the standard deviation of the stock's returns?

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Answer 1

Answer #1

a) Average return = (-4%+28%+12%+4%)/4 = 10%

b) Variance = [(-4%-10%)² + (28%-10%)² + (12%-10%)² + (4%-10%)²]/(4-1) = 1.87%

c) Standard Deviation = Variance^0.5 = (1.87%)^0.5 = 13.66%

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Answer 2

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