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The rates of return on Cherry Jalopies, Inc., stock over the last five years were 11...

The rates of return on Cherry Jalopies, Inc., stock over the last five years were 11 percent, 11 percent, −4 percent, 3 percent, and 7 percent. Over the same period, the returns on Straw Construction Company’s stock were 16 percent, 16 percent, −5 percent, 5 percent, and 8 percent.

Calculate the variances and the standard deviations for Cherry and Straw. (Do not round intermediate calculations. Enter your variance as a decimal rounded to 5 decimal places. Enter your standard deviation as a percent rounded to 2 decimal places.)

Cherry Straw

Variance

Standard deviation % %

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Answer #1

Cherry:

Mean = (0.11 + 0.11 - 0.04 + 0.03 + 0.07) / 5

Mean = 0.056 or 5.6%

Variance = [(0.11 - 0.056)2 + (0.11 - 0.056)2 + (-0.04 - 0.056)2 + (0.03 - 0.056)2 + (0.07 - 0.056)2] / 5 - 1

Variance = [0.002916 + 0.002916 + 0.009216 + 0.000676 + 0.000196] / 4

Variance = 0.00398

Standard deviation = (0.00398)1/2

Standard deviation = 0.0631 or 6.31%

Straw:

Mean = (0.16 + 0.16 - 0.05 + 0.05 + 0.08) / 5

Mean = 0.08 or 8%

Variance = [(0.16 - 0.08)2 + (0.16 - 0.08)2 + (-0.05 - 0.08)2 + (0.05 - 0.08)2 + (0.08 - 0.08)2] / 5 - 1

Variance = [0.0064 + 0.0064 + 0.0169 + 0.0009 + 0] / 4

Variance = 0.00765

Standard deviation = (0.00765)1/2

Standard deviation = 0.0875 or 8.75%

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