Question

What is the sample variance of the return of the following stock? Quarter Return 1st 10%...

  1. What is the sample variance of the return of the following stock?

Quarter

Return

1st

10%

2nd

-5%

3rd

0%

4th

20%

0 0
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Answer #1

The correct answer is 92.1875

Note:

Mean = (10 % - 5%+0%+20%) /4

= 6.25%

Year Probable Return Deviation ( Probable Return- Expected Return) Deviation Squared
2001 10 3.75 14.06
2002 -5 -11.25 126.56
2003 0 -6.25 39.06
2004 20 13.75 189.06
Sum of Deviation Squared 368.75

Variance = Sum of Deviation Squared / Number of Periods

=368.75 / 4

= 92.1875

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