Betr Ltd has earned the following returns over the past 5 years:

Year

Return

1

15%

2

27%

3

-12%

4

0%

5

10%

You are required to:

Answer the following questions:

a)

If the past is a good predictor of the future, what return can an investor expect on

Betr's shares next year? Show the relevant formula.

b)

Compute the historic variance and standard deviation of the returns. Show the

relevant formula