You find a certain stock that had returns of 14 percent, -27 percent, 19 percent, and...

You find a certain stock that had returns of 14 percent, -27 percent, 19 percent, and 21 percent for four of the last five years, respectively. What is the average return of the stock over this period? What is the standard deviation of the stock's returns?

Expert Solution

Answer

1.

Average = {14 + (27) + 19 + 21} / 4

Average = 6.75%

2.

X	A = X - M	A^2
	Let’s assume M = 19
14	(5)	25
(27)	(46)	2116
19	-	0
21	2	4
Total		2145

Standard Deviation = Under root of (A^2 / n-1)

= Under root of (2145 / 4-1)

Standard Deviation = 26.74

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ekkarill92 answered 2 years ago

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You find a certain stock that had returns of 14 percent, -27 percent, 19 percent, and...

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