Question

Help Save & Exit Submit Check my work You've observed the following returns on Regina Computer's stock over the past five years: 16%, -5%, 19%, 13%, and 10%. a. What was the arithmetic average return on Regina's stock over this five-year period? (Round the final answer to 1 decimal place.) Average return 1% b-1. What was the variance of Regina's returns over this period? (Do not round intermediate calculations. Round the final answer to 5 decimal places.) Variance 6 +

Average return=?

variance=?

standard deviation=?

Answer 1

a). Average Return = [$\sum_{i=1}^{n }${R(i)}] / n

= [16% + (-5%) + 19% + 13% + 10%] / 5

= 53% / 5 = 10.6%

b-1). Variance = [$\sum_{i=1}^{n }${E(r) - R(i)}²] / (n - 1)

= [(10.6% - 16%)² + (10.6% + 5%)² + (10.6% - 19%)² + (10.6% - 13%)² + (10.6% - 10%)²] / (5 - 1)

= [29.16%² + 243.36%² + 70.56%² + 5.76%² + 0.36%²] / 4

= 349.20%² / 4 = 87.30%²

b-2). Standard Deviation = [Variance]^1/2

= [87.30%²]^1/2 = 9.34%