Question

Using the following returns, calculate the arithmetic average returns, the variances, and the standard deviations for X and Y. Returns Year X Y 1 11 % 23 % 2 29 44 3 18 -11 4 -19 -25 5 20 52

Using the following returns, calculate the arithmetic average returns, the variances, and the standard deviations for X and Y.

  

	Returns
Year	X	Y
1	11 %	23 %
2	29	44
3	18	-11
4	-19	-25
5	20	52

Answer 1

Expected Return of X

Year	Returns
1	11%
2	29%
3	18%
4	-19%
5	20%
	59%
Expected Return	11.8%

Expected Return of Y

Year	Returns
1	23%
2	44%
3	-11%
4	-25%
5	52%
	83%
Expected Return	16.6%

Variance and Standard devaiation of X:

Year	Returns X	X-Avg X	(X-Avg X)^2
1	11%	-0.80%	0.000064
2	29%	17.20%	0.029584
3	18%	6.20%	0.003844
4	-19%	-30.80%	0.094864
5	20%	8.20%	0.006724
Sum of (X-AvgX)^2	0.135080
Variance = [ Sum of (X-AvgX)^2 ] / n	0.027016
SD = Sqrt of Variance	16.44%

  Variance and Standard devaiation of Y:

Year	Returns Y	Y-Avg Y	(Y-Avg Y)^2
1	23%	6.40%	0.004096
2	44%	27.40%	0.075076
3	-11%	-27.60%	0.076176
4	-25%	-41.60%	0.173056
5	52%	35.40%	0.125316
Sum of (X-AvgX)^2	0.453720
Variance = [ Sum of (X-AvgX)^2 ] / n	0.090744
SD = Sqrt of Variance	30.12%

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