Question

A stock had returns of 18.53 percent. -5.55 percent, 20.78 percent, and 8.87 percent for the past four years. What is the variance of the returns? Multiple Choice ο 00646 ο ο1721 ο 1977 ο O1434 ο O1913

Answer 1

Dear student, only one question is allowed at a time. I am answering the first question

The following steps will be followed in calculation of variance which will be shown in the following table

1. All the values are in percentages which will be converted to decimals by dividing them by 100
2. First we will calculate the mean of these values which is = Sum of values / Number of values
3. After that, the mean will be subtracted from each value
4. The subtracted result will be squared and the sum of these squared results will be calculated
5. After that the sum of the result calculated in step 4 will be divided by ( number of values – 1)
6. The resulting value is the variance of the data

Calculations	A	B = A - 0.1066	C = B ^ 2
	Returns	Returns - Mean	Squared results
	0.1853	0.0787	0.00620
	-0.0555	-0.1621	0.02627
	0.2078	0.1012	0.01025
	0.0887	-0.0179	0.00032
Sum of values	0.4263	0	0.04303
Mean	0.1066	Variance	0.01434

Mean

= 0.4263 / 4

= 0.1066

Variance

= 0.04303 / ( 4 – 1)

= 0.01434

So, as per above calculations, option D is the correct option