Question

In: Accounting

Given the following table, calculate the standard deviation of returns for Vegeta Incorporated. Select the range that includes the correct answer.

Given the following table, calculate the standard deviation of returns for Vegeta Incorporated. Select the range that includes the correct answer. 

Solutions

Expert Solution

The option (1) is the right option.

 

Explanation:

Year return return-average return square of (return-average return)  
2017 10% 6.25% 0.39062500%  
2018 25% 21.25% 4.51562500%  
2019 -15% -18.75% 3.51562500%  
2020 -5% -8.75% 0.76562500%  
average return = (10+25-15-5)/4 3.75%      
sum of (square of (return-average return)     9.19%  
variance = sum of (square of (return-average return) 9.19%/4   0.022975  
standard deviation = square root of variance     15.16%  
Option is (1) standard deviation is less than or equal to 16%      

The correct answer is (1).

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