Question

Five years of realized returns for BLM are given in the following table. Remember: 1. While BLM 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 BLM for 2012 to 2015 are: 2012 7.50% 2013 5.10% 2014 9.00% 2015 12.60% 2016 3.90% Stock return Given the preceding data, the average realized return on BLM's stock is of BLM's historical returns. Based on this conclusion, the The preceding data series represents standard deviation of BLM's historical returns is If investors expect the average realized return from 2012 to 2016 on BLM's stock to continue into the future, its coefficient of variation (CV) will be

Answer 1

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

А В C E 1 2 Stock Return Year 3 7.50% 2012 4 2013 5.10% 9.00% 2014 12.60% 6 2015 7 3.90% 2016 8 1 Average return of BLM's stock 7.62% 9 10 2 The preceding data series represents Sample of BLM's historical returns. 11 12 3 Standard deviation of BLM's historical return 3.42% 13 14 4 Coefficient of variation (CV) 0.45 15 16 17 Lr LC

Cell reference -

А В C 1 Stock Return 2 Year 2012 2013 2014 2015 2016 0.075 0.051 0.09 0.126 0.039 3 4 6 7 8 -AVERAGE(C3:C7) Average return of BLM's stock 9 1 10 The preceding data series represents of BLM's historical returns. Sample 11 2 12 |=STDEV.S(C3:C7) Standard deviation of BLM's historical return 13 3 14 -С13/С9 Coefficient of variation (CV) 15 4 16 17 18 19 LC LO

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