Homework Answers
Average Return = Sum of Returns / No. of Returns
Standard Deviation = Square Root of ( Sum of Square of Difference of return from Mean / N -1)
Using the above formula we find :
| Year | Investment X | Square of Difference from Mean | Investment Y | Square of Difference from Mean |
| 2010 | 13 | 10.24 | 24 | 54.76 |
| 2011 | 19 | 7.84 | 22 | 29.16 |
| 2012 | 16 | 0.04 | 10 | 43.56 |
| 2013 | 21 | 23.04 | 11 | 31.36 |
| 2014 | 12 | 17.64 | 16 | 0.36 |
| Total | 81 | 58.8 | 83 | 159.2 |
| Average | 16.2 | 16.6 |
Standard Deviation of X = Square Root of (58.8 / 4)
= 3.83
Standard Deviation of Y = Square Root of (159.2 / 4)
= 6.31
Standard Deviation is the measure of how actuals are close or away from mean. Closer the actual numbers from mean reflect lower risk and lower SD. And vice versa.
Add Answer to:
Problem 8-05 Two investments generated the following annual returns: Investment x 13% Investment Y 24% 22...
Problem 8-05 Two investments generated the following annual returns: Investment X Investment Y 20x0 13% 17...
Problem 8-05 Two investments generated the following annual returns: Investment X Investment Y 20x0 13% 17 % 20X1 24 20X2 18 20x3 14 20X4 12 a. What is the average annual return on each investment? Round your answers to one decimal place. The average annual rate of return on X: % The average annual rate of return on Y: b. What is the standard deviation of the return on investments X and Y? Round your answers to two decimal places....
Problem 1 (14 marks): Consider the following historical returns on two investments A and B. The...
Problem 1 (14 marks): Consider the following historical returns on two investments A and B. The average risk-free rate during the 2011-2015 period was equal to 3%. Annual return (%) Year Investment A Investment B 2015 5% -5% -2% 2014 -20% 15% 2013 30% 20% 2012 40% 2011 5% 10% a) Calculate the average return and the risk premium for each investment. Which investment is likely to be is riskier? Explain. (6 marks) b) Calculate the standard deviation for each...
1. 2. A stock you are looking at has generated the following annual returns: 10.0%, -5.0%...
1.
2.
A stock you are looking at has generated the following annual returns: 10.0%, -5.0% and 4.0%. What was the standard deviation of its returns? Answer in percent, rounded to two decimal places (e.g., 4.32% = 4.32). Numeric Answer: 11.66 You are incorrect 11.66 A stock has generated an annual average return of 8.0% with a standard deviation of 45.0% during the last 10 years. If the average risk-free rate was 1.6%, what was this stock's Sharpe Ratio? Round...
Consider the following returns for two investments, A and B, over the past four years: Investment...
Consider the following returns for two investments, A and B, over the past four years: Investment 1: 4% 9% –8% 13% Investment 2: 15% 12% –14% 10% a-1. Calculate the mean for each investment. (Round your answers to 2 decimal places.) Mean Investment 1 % Investment 2 % a-2. Which investment provides the higher return? Investment 1 Investment 2 b-1. Calculate the standard deviation for each investment. (Round your answers to 2 decimal places.) Standard Deviation Investment 1 Investment...
Possible Returns Probability Investment Investment Y .05 -10% 0% 5% 5% 20% 16% 25 30% 24%...
Possible Returns Probability Investment Investment Y .05 -10% 0% 5% 5% 20% 16% 25 30% 24% .05 40% 32% Calculate the expected return and standard deviation for each investment. Find the standard deviation manually Upload your work to receive credit. Probability Returns .40 7% 4% 18% 10%
a. What is the average annual return on each investment? b. What is the standard deviation...
a.
What is the average annual return on each investment?
b.
What is the standard deviation of the return on investments X and
Y?
c.
Based on the standard deviation, which investment was
riskier?
Investment X 10% 20 30 20 10 Investment Y 19X0 19X1 19X2 19X3 19X4 1696 18 15 20 21
1) A stock has generated an annual average return of 9.5% with a standard deviation of...
1) A stock has generated an annual average return of 9.5% with a standard deviation of 40.7% during the last 10 years. If the average risk-free rate was 1.7%, what was this stock's Sharpe Ratio? Round to two decimal places. 2) The standard deviation of a stock's annual returns is 40.4%. The standard deviation of market returns is 24.3%. If the correlation between the returns of the stock and the market is 0.3, what is this stock's beta? Round to...
Use the following returns for X and Y. Returns Year X 21.4% -16.4 9.4 18.8 4.4...
Use the following returns for X and Y. Returns Year X 21.4% -16.4 9.4 18.8 4.4 Y 25.2% - 3.4 27.2 – 13.8 31.2 a. Calculate the average returns for X and Y. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the variances for X and Y. (Do not round intermediate calculations and round your answers to 6 decimal places, e.g., 32.161616.) c. Calculate the standard deviations...
Consider the following returns for two investments, A and B, over the past four years: 9...
Consider the following returns for two investments, A and B, over the past four years: 9 10 78 98-16% 14% 158 Investment 1: Investment 2s a. Calculate the mean for each investment. (Round your answers to 2 decimal places.) Inve b. Calculate the standard deviation for each investment. (Round your answers to 2 decimal places.) Standard Deviation 2
Stock X has a 10.0% expected return, a beta coefficient of 0.9, and a 35% standard...
Stock X has a 10.0% expected return, a beta coefficient of 0.9, and a 35% standard deviation of expected returns. Stock Y has a 13.0% expected return, a beta coefficient of 1.3, and a 30% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. Calculate each stock's coefficient of variation. Do not round intermediate calculations. Round your answers to two decimal places. CVx = CVy = Which stock is riskier for a diversified investor? For...
Problem 8-05 Two investments generated the following annual returns: Investment X Investment Y 20x0 13% 17 % 20X1 24 20X2 18 20x3 14 20X4 12 a. What is the average annual return on each investment? Round your answers to one decimal place. The average annual rate of return on X: % The average annual rate of return on Y: b. What is the standard deviation of the return on investments X and Y? Round your answers to two decimal places....
Problem 1 (14 marks): Consider the following historical returns on two investments A and B. The average risk-free rate during the 2011-2015 period was equal to 3%. Annual return (%) Year Investment A Investment B 2015 5% -5% -2% 2014 -20% 15% 2013 30% 20% 2012 40% 2011 5% 10% a) Calculate the average return and the risk premium for each investment. Which investment is likely to be is riskier? Explain. (6 marks) b) Calculate the standard deviation for each...
1.
2.
A stock you are looking at has generated the following annual returns: 10.0%, -5.0% and 4.0%. What was the standard deviation of its returns? Answer in percent, rounded to two decimal places (e.g., 4.32% = 4.32). Numeric Answer: 11.66 You are incorrect 11.66 A stock has generated an annual average return of 8.0% with a standard deviation of 45.0% during the last 10 years. If the average risk-free rate was 1.6%, what was this stock's Sharpe Ratio? Round...
Possible Returns Probability Investment Investment Y .05 -10% 0% 5% 5% 20% 16% 25 30% 24% .05 40% 32% Calculate the expected return and standard deviation for each investment. Find the standard deviation manually Upload your work to receive credit. Probability Returns .40 7% 4% 18% 10%
a.
What is the average annual return on each investment?
b.
What is the standard deviation of the return on investments X and
Y?
c.
Based on the standard deviation, which investment was
riskier?
Investment X 10% 20 30 20 10 Investment Y 19X0 19X1 19X2 19X3 19X4 1696 18 15 20 21
Use the following returns for X and Y. Returns Year X 21.4% -16.4 9.4 18.8 4.4 Y 25.2% - 3.4 27.2 – 13.8 31.2 a. Calculate the average returns for X and Y. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the variances for X and Y. (Do not round intermediate calculations and round your answers to 6 decimal places, e.g., 32.161616.) c. Calculate the standard deviations...
Consider the following returns for two investments, A and B, over the past four years: 9 10 78 98-16% 14% 158 Investment 1: Investment 2s a. Calculate the mean for each investment. (Round your answers to 2 decimal places.) Inve b. Calculate the standard deviation for each investment. (Round your answers to 2 decimal places.) Standard Deviation 2
Most questions answered within 3 hours.
-
Starting with benzene, synthesize 1-phenyl-1-butyne.
Show intermediates and reagents.
asked 16 minutes ago -
Create a 32-run crossed array design with six control factors
and two noise factors such that...
asked 1 hour ago -
A 500g sample of sand from source A has the following amounts
retained on each sieve....
asked 1 hour ago -
In
your own words, please explain the essay by John Keynes wrote "The
End of Laissez...
asked 1 hour ago -
How are the matrix and pixels related? Why are smaller
pixels better for diagnostic quality?
asked 1 hour ago -
2. An AC generator has 80 rectangular loops on
its armature. Each loop is 11 cm...
asked 1 hour ago -
Please help me with this question. Consider Aldi’s current and
potential geographic markets (see Exhibit 4...
asked 1 hour ago -
What are the main components of the fermentation process and
give an explanation of each? Include...
asked 1 hour ago -
Explain which types of cells in the body (belonging to which
organs, etc.) are sensitive to...
asked 1 hour ago -
A single cable supports an 703-kg elevator car. What is the
tension in the cable when...
asked 1 hour ago -
among the three different ways to link CSS specifications to an
HTML document (inline CSS, document...
asked 2 hours ago -
(1) Write the net ionic equation for the reaction that occurs
when equal volumes of 0.191...
asked 2 hours ago