A stock had returns of 18.58 percent, −5.58 percent, 20.81 percent, and 8.89 percent for the...

Question

Question

A stock had returns of 18.58 percent, −5.58 percent, 20.81 percent, and 8.89 percent for the past four years. What is the variance of the returns?

Answer 1

Answer #1

Average return=Total return/Total time period

=(18.58−5.58+20.81+8.89)/4=10.675%

Standard deviation=[Total (Return-Average return)^2/(Time period-1)]^(1/2)

=[432.6185/(4-1)]^(1/2)

=[432.6185/3]^(1/2)

=12.01%(Approx).

Variance=Standard deviation^2

=0.01442(Approx).

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Answer 2

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