Question

Over the past five years, a stock returned 8.4 percent, 8.7 percent, 3.2 percent, 1.5 percent, and 11.5 percent, respectively. What is the variance of these returns? A) .041302 B) .043375 C) .006824 D) .165321 E) .005459

Answer 1

Mean = (0.084 + 0.087 + 0.032 + 0.015 + 0.115) / 5

Mean = 0.0666 or 6.66%

Variance = [(0.084 - 0.0666)² + (0.087 - 0.0666)² + (0.032 - 0.0666)² + (0.015 - 0.0666)² + (0.115 - 0.0666)²] / 5 - 1

Variance = [0.000303 + 0.000416 + 0.001197 + 0.002663 + 0.002343] / 4

Variance = 0.001731

Note: options looks incorrect. If the question is slightly different, please put it comments.