Question

You’ve observed the following returns on SkyNet Data Corporation’s stock over the past five years: 12 percent, –9 percent, 20 percent, 17 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 %

Answer 1

Solution :

a. The arithmetic average return on the company's stock over this five-year period = 10.0 %

b-1. The variance of the company's returns over this period = 102.80000

b-2 the Standard Deviation of the company's returns over this period = 10.14 %

Please find the attached screenshot of the excel sheet containing the detailed calculation for the solution.