Question
Question 2. You've observed the following returns on Pine Computer's stock over the past five years: 17 percent, -4 percent, 20 percent, 12 percent, and
Question 2.
You've observed the following returns on Pine Computer's stock over the past five years:
17 percent, -4 percent, 20 percent, 12 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.)
a. Average return | % |
b-1. Variance |
|
b-2. Standard deviation | % |
Question 3.
A stock has had returns of 13 percent, 20 percent, 22 percent, -11 percent, 27 percent, and -5 percent over the last six years. What are the arithmetic and geometric average returns for the stock? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
Arithmetic average return | % |
Geometric average return | % |
Question 4.
Consider the following information:
Rate of Return if State Occurs
State of Economy | Probability of State economy | Stock a | Stock b |
Recession | .18 | .07 | -.18 |
Normal | .55 | .10 | .11 |
Boom | .27 | .15 | .28 |
- Calculate the expected return for Stocks A and B. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
- Calculate the standard deviation for Stocks A and B. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
a. Stock A expected return | % |
a. Stock B expected return | % |
B. Stock A standard deviation | % |
B. Stock B standard deviation | % |
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