Obtuse Ltd has recorded the following end-of-year share prices and paid dividends: Year Price Dividend 2010...

Obtuse Ltd has recorded the following end-of-year share prices and paid dividends: Year Price Dividend 2010 $1.20 $0.00 2011 $1.35 $0.05 2012 $1.12 $0.00 2013 $1.47 $0.00 2014 $1.71 $0.05 2015 $1.69 $0.00 2016 $1.82 $0.06 2017 $1.87 $0.10 Calculate the yearly returns for this share. Calculate the standard deviation of returns for the company's shares. This question has been answered but I want to know how he arrived at the result of standard deviation (15.58%). Thanks

Expert Solution


Year	Price	Dividend	Change in price i.e. capital gain (This year price - last year price)=	Total Return = Capital gain + dividend	Return(%) = Total Return/Last year price	x - Mean	(x-Mean)^2
					(x)
2010	1.2	0	0	0	0.0000	-0.0748	0.0056
2011	1.35	0.05	0.15	0.2	0.1481	0.0734	0.0054
2012	1.12	0	-0.23	-0.23	-0.2054	-0.2801	0.0785
2013	1.47	0	0.35	0.35	0.2381	0.1633	0.0267
2014	1.71	0.05	0.24	0.29	0.1696	0.0948	0.0090
2015	1.69	0	-0.02	-0.02	-0.0118	-0.0866	0.0075
2016	1.82	0.06	0.13	0.19	0.1044	0.0296	0.0009
2017	1.87	0.1	0.05	0.15	0.0802	0.0055	0.0000
					0.523252		0.13352

Mean Return =		Sum x / (n-1) =		0.523252/(8-1)
				0.07475

SD =	Sq. Root of (Sum (x-Mean)^2/(n-1))
SD =	Sq. Root of (0.13352/(8-1))
SD =	Sq. Root of (0.019074)
SD =	0.138108
SD =	13.8108%

jeff jeffy answered 3 years ago

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