Question

You’ve observed the following returns on Yamauchi Corporation’s stock over the past five years: –29.7 percent, 16.8 percent, 36.6 percent, 3.9 percent, and 22.9 percent. a. What was the arithmetic average return on the stock over this five-year period? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What was the variance of the returns over this period? (Do not round intermediate calculations and round your answer to 6 decimal places, e.g., 32.161616.) c. What was the standard deviation of the returns over this period? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Answer 1

	Year	Return %	Deviation from mean [d]	d^2
	1	29.7	7.72	59.5984
	2	16.8	-5.18	26.8324
	3	36.6	14.62	213.7444
	4	3.9	-18.08	326.8864
	5	22.9	0.92	0.8464
		109.9		627.9080
a]	Arithmetic average = 109.9/5 =			21.98%
b]	Variance = 627.9080/5 =			125.581600
c]	Standard deviation = (125.5816)^0.5 =			11.21%