Question

1. The rate of return on ABC, Inc., stock over the last five years was 0.35 percent, 0.82 percent, 8.93 percent, 1.55 percent, and 11.12 percent. What was the standard deviation of returns (in percent) on ABC stock over this period? Do intermediate work to six decimals. Answer to two decimals.

2. You are saving for retirement. On April 1, you deposit $515 in your target-date fund. By May 15, your initial deposit is worth $530 and you deposit an additional $262 at that time. On August 15, your account shows a value of $826 and you make a further deposit of $271. On November 30, your account shows a balance of $1087. What is your time-weighted return (in percent) for the period April 1 - November 30?   Answer to two decimals. Carry intermediate calculations to six decimals.

3. You open an account where you deposit $500 today. Further, you deposit $800 at the beginning of next year, withdraw $250 at the beginning of year two and deposit $450 at the beginning of year 3. The return for year 1 is 6%, for year 2 it is -8%, for year 3 it is 4.5% and for year 4 it is -2%. What is your dollar-weighted or money-weighted return (in percent) for the four-year period? Answer to two decimals.

a.

-1.45

b.

-6.95

c.

-11.92

Answer 1

1. Average return = (0.35+0.82+8.93+1.55+11.12)%/5 = 4.554%.

StandardDeviation = $\sqrt\frac{{(.35-4.554)^2+(.82-4.554)^2+(8.93-4.554)^2+(1.55-4.554)^2+(11.12-4.554)^2}}{5}=5.07percent$ = 5.07%

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