Question

need some help on these three problems!

4. Data on returns is in cells A2 through A9. To compute the arithmetic average return, which of the following Excel formulas would you use? AVERAGE(A2:49) c C C =AVERAGE(A2:A9) =AVERAGE(A2-A9) -SUMCA2:19)/9 5. Which of the following statements is true? To compute variance, divide the sum of the squared deviations by the number of observations. To compute variance, divide the sum of the deviations by the number of observations minus The coefficient of variation measures return per unit of risk. Deviations computed from a data sample will always add up to zero. 6. Which of the following is NOT a way to measure the risk of a single asset? Sum of deviations Coefficient of variation Standard deviation Variance

Answer 1

a) B. =Average(A2:A9). Options A and C are invalid syntax, while Option D is logical error, it would have another correction option if it was = sum(A2:A9)/8

b) D. Deviations computed from a data sample will always add up to zero.

Deviation =

X; – Σx)/n

Sum up all Deviations = X1 + X2 + X3 +....+ Xn - n*

(Σx)/η

= (X1 + X2 + X3 +....+ Xn)-n*(X1 + X2 + X3 +....+ Xn)/n

= (X1 + X2 + X3 +....+ Xn) - (X1 + X2 + X3 +....+ Xn) = 0

c) A. Sum of Deviations.

As explained in part b), sum of deviations is always zero hence cannot be used to measure risk