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Q1. (5 points) A stock's price-earnings (P/E) ratio is the per-share price of its stock divided by the company's annual profit per share. The
Q1. (5 points) A stock's price-earnings (P/E) ratio is the per-share price of its stock divided by the company's annual profit per share. The P/E ratio for the stock market as a whole is used by some analysts as a measure of whether stocks are cheap or expensive, in comparison with other historical periods. Here are some annual P/E ratios for the S&P 500: Year P/E 1980 7.90 1981 8.36 1982 8.62 1983 12.45 1984 9.98 1985 12.32 1986 16.42 1987 18.25 1988 12.48 1989 13.48 1990 15.46 1991 20.88 1992 23.70 1993 22.42 1994 17.15 1995 16.42 1996 19.08 1997 21.88 1998 28.90 1999 31.55 Calculate the sample mean and variance. You can use Microsoft Excel to calculate them. But you need to write the appropriate formula here that you used to calculate them.
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