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(please show on excel) Consider the following realized annual returns: Year End Index Realized Return 2000 23.60% 2001 24.70% 2002 30.50% 2003 9.00% 2004 -2.00%
(please show on excel)
| Consider the following realized annual returns: | |||||||||||
| Year End | Index Realized Return | ||||||||||
| 2000 | 23.60% | ||||||||||
| 2001 | 24.70% | ||||||||||
| 2002 | 30.50% | ||||||||||
| 2003 | 9.00% | ||||||||||
| 2004 | -2.00% | ||||||||||
| 2005 | -17.30% | ||||||||||
| 2006 | -24.30% | ||||||||||
| 2007 | 32.20% | ||||||||||
| 2008 | 4.40% | ||||||||||
| 2009 | 7.40% | ||||||||||
| a. What is the average annual return on the Index from 2000 to 2009? | |||||||||||
| b. What is the variance of the returns on the Index from 2000 to 2009? [show your work by deriving the variance] | |||||||||||
| c. What is the standard deviation of the returns on the Index from 2000 to 2009? [show your work by deriving the standard deviation] | |||||||||||
| d. Suppose that you want to use the 10 year historical average return on the Index to forecast the expected future return on the Index. What is the standard error of your estimate of the expected return? | |||||||||||
| e. Suppose that you want to use the 10 year historical average return on the Index to forecast the expected future return on the Index. What is the 95% confidence interval for your estimate of the expected return? | |||||||||||
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