Question

Returns earned over a given time period are called realized returns. Historical data on realized returns is often used to estimate future resu Analysts across companiess use realized stock returns to estimate the risk of a stock. Consider the case of Falcon Freight Inc. (FF): Five years of realized returns for FF are given in the following table. Remember: 1. While FF was started 40 years ago, its common stock has been publicly traded for the past 25 years. 2. The returns on its equity are calculated as arithmetic returns. 3. The historical returns for FF for 2012 to 2016 are: 2012 2013 2014 2015 2016 Stock return 7.50% 5.10% 9.00% 12.60% 3.90% Given the preceding data, the average realized return on FF's stock is The preceding data series represents of FF's historical returns. Based on this conclusion, the standard deviation of FF's historical returns is If investors expect the average realized return from 2012 to 2016 on FF's stock to continue into the future, its coefficient of variation (CV) will be

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

- 2x BELEZEA BE BF 149 STATS - Microsoft Excel (Product Activation Failed) File Home Insert Page Layout Formulas Data Review View Add-Ins * Cut Σ AutoSum : A Calibri -11 A A = = = r Wrap Text Number E Copy Fill Paste U B B- I A Merge & Center - $ % , :.: Conditional Format Cell Sort & Insert Delete Format Find & Format Painter Formatting as Table Styles Clear Filter Select Clipboard Font Alignment Number Styles Cells Editing BF156 - fax STDEV.S(BF150:BF154) BB BC BD BG BH BI BI 147 148 YEAR RETURN (%) 150 2012 7.50 151 2013 5.10 152 2104 9.00 153 2015 12.60 154 2016 3.90 EXCEL FORMULA 155 AVERAGE RETURN 7.62 % AVERAGE(BF150:BF154) 156 STANDARD DEVIATION 3.4245 % STDEV.S(BF150:BF154) 157 158 ANS 1 THE AVERAGE REALISED RETURN ON STOCK IS 7.62 % 159 160 ANS 2 THE PRECEDING DATA SERIES REPRESENTS SAMPLE 161 162 3.42 % (ROUNDED TO 2 DECIMAL) 163 164 ANS 4 CV = STANDARD DEVIATION/MEAN 0.45 19.70/21.59) (ROUNDED TO 2 DECIMAL) 165 166 167 P V FV DIVIDEND EMV MEAN STDV assignment DEAR Sheet2 COV TIME SERIES corr REGRESSION range CAMERA TREND fregMATRIX INTERVAL, NORMAL HYPOTHI Rea ferences BOU 120% DOR . * ENG ANS 3 STANDARD DEVIATION OF HISTORICAL RETURNS IS H 04-11-2019