Problem 12-9 Calculating Returns and Variability [LO1]
You’ve observed the following returns on Crash-n-Burn Computer’s stock over the past five years: 13 percent, –8 percent, 16 percent, 16 percent, and 10 percent. |
a. |
What was the arithmetic average return on the company’s stock over this five-year period? (Do not round intermediate calculations and enter your answer as a percent rounded to 1 decimal place, e.g., 32.1.) |
b-1. | What was the variance of the company’s returns over this period? (Do not round intermediate calculations and round your answer to 5 decimal places, e.g., .16161.) |
b-2. | What was the standard deviation of the company’s returns over this period? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
Year | CnB |
1 | 13.00% |
2 | -8.00% |
3 | 16.00% |
4 | 16.00% |
5 | 10.00% |
A. Average= | 9.40% |
B. 2 Standard dev= | 10.04% |
B-1 Variance= | 0.01008 |
Where | |||||||
Average or Mean = Sum of all observations/Count of all observations | |||||||
Sample Standard deviation =((∑k=1 to N (observationk – average))/(N-1))^(1/2) | |||||||
Variance = standard deviation^2 |
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