Answered step by step
Verified Expert Solution
Question
1 Approved Answer
> Question 23 4 pts Macro Corporation has had the following returns for the past three years, -13%, 11%, and 35%. Calculate the standard deviation
> Question 23 4 pts Macro Corporation has had the following returns for the past three years, -13%, 11%, and 35%. Calculate the standard deviation of the returns. Hint by professor: For this type of question, the probability of each state is not assigned because they represent three historical data points. The formulas for expected return and variance are as follows (N is the number of observations given) Expected return =ER = 1/N *(r1+r2+...+rN); Variance = Var = 1/(N-1) *[(r1 - ER)^2 + (r2 - ER)^2 +...+ (rN - ER)^2] Standard deviation = SQRT(Var) The convention is to use an equal weight, 1/N, for the expected return. However, notice the weight of 1/(N-1) used in the variance calculation. This is usually used as a convention to reduce bias for a small sample. 20% 24% 30% 40% D Question 24 4 pts Sun Corporation has had returns of -3%, 12%, 16%, and 23% for the past four years. Calculate the standard deviation of the returns. Hint by professor: For this type of question, the probability of each state is not assigned because they represent three historical data points. The formulas for expected return and variance are as follows (N is the number of observations given) Expected return =ER = 1/N *(r1+r2+...+rN); Variance = Var = 1/(N-1) *[(r1 - ER)^2 + (r2 - ER)^2 +...+ (rN - ER)^2] Standard deviation = SQRT(Var) The convention is to use an equal weight, 1/N, for the expected return. However, notice the weight of 1/(N-1) used in the variance calculation. This is usually used as a convention to reduce bias for a small sample. 9.4% 16.81% 10.98% O 11.65%
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started