You have been following a stock for 3 months and the following is its past return...

You have been following a stock for 3 months and the following is its past return

Year 1: 7%

Year 2: 13%

Year 3: -3%

What is the standard deviation of the stock based on the historical data? (Put the answer in decimal points instead of percentage)

Solutions

Expert Solution

Statement showing Standard deviation

Year	Return (x) (in %)	(x-u)	(x-u)^2
1	7	1.33	1.77
2	13	7.33	53.73
3	-3	-8.67	75.17
	17		130.67

Mean = u = 17/3 = 5.67

Standard devaition = [130.67/3]^0.5

= 43.56^0.5

= 6.60

Thus ans = 0.066

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

1.You have been following a stock for 4 months and the following is its past return...

1.You have been following a stock for 4 months and the following is its past return Year 1: 5% Year 2: 16% Year 3: -1% Year 4: -2% What is the expected return based on historical data? 2.You have been following a stock for 3 months and the following is its past return Year 1: 7% Year 2: 14% Year 3: 7% What is the standard deviation of the stock based on the historical data? 3.Your investment has a 30%...

For the past few months, you and your new business partner named Offset, have been working...

For the past few months, you and your new business partner named Offset, have been working on a proposal to close a very difficult business deal with a major clothing retailer. You feel he is key to the successful internal operation of the company and you are delighted that he has agreed to come aboard. As your new partner he has several contacts in the industry who have expressed interest in the NOAH clothing line. You recently inherited $1M from...

You have been given the following return data on 3 assets; A, B and C over...

You have been given the following return data on 3 assets; A, B and C over the period of 2013 -2016. Expected return Year Asset A Asset B Asset C 2013 16 17 14 2014 17 16 15 2015 18 15 16 2016 19 14 17 Using these assets, you have isolated three investment alternatives: Option Investment 1 100% of asset A 2 50% of asset A and 50% of asset B 3 50% of asset A and 50% of...

Suppose the return for stocks A and B for the last six months have been the...

Suppose the return for stocks A and B for the last six months have been the following: A. B 3,2% 4,7% 4,1% 2,0% -2,7% 1,4% -0,5% -0,8% 6,7% 2,7% 5,5% -1,2% a. What is the expected return, variance and standard deviation of the two stocks? What is the covariance and correlation among them? b. What would the return and standard deviation of a portfolio that is 30% invested in stock A and 70% invested in stock B be?

You have the following information for Stock A and Stock B: Expected rate of return Stock...

You have the following information for Stock A and Stock B: Expected rate of return Stock A: .12 Stock B: .06 Standard deviation: Stock A: .9 Stock B: .5 Correlation between the two stocks: .80 If you invest $600 and $400 in Stock A and Stock B respectively, what is the standard deviation of the portfolio?

2 part problem. The past couple of months have been hard for Doug and Stacy. Their...

2 part problem. The past couple of months have been hard for Doug and Stacy. Their first baby, Ryan, arrived five weeks early. Ryan stayed in the hospital for three weeks after he was born, because there were some issues with his lungs. Nevertheless, the doctors have assured Doug and Stacy that he will be fine. The first month at home has been exciting but stressful, and Doug and Stacy are just beginning to settle into their roles as new...

You have been following Mr. Miller for the past 2 years. You have worked with him,...

You have been following Mr. Miller for the past 2 years. You have worked with him, trying to get him to lose weight by changing his lifestyle and nutritional habits. He continues to be overweight (body mass index [BMI] of 33) and has tried to cut down his carbohydrate and fat intake, but now presents with polyuria, polydipsia, and an elevated random blood sugar of 164. You have ordered an HbA1c test in the past, as he is at high...

After 3 months on the job, you have now been tasked to provide an investment recommendation...

After 3 months on the job, you have now been tasked to provide an investment recommendation to the Board of Directors of UCW. Currently, UCW is looking to lease an additional 2,000 square feet in Vancouver House. Assume that it currently has 10,000 square feet under lease and that the additional potential space is located on the 1st floor. Zoning for this space provides for multiple potential uses, including retail, restaurants and education. You are to propose a recommendation to...

Consider the following: You have Stock A and Stock B Expected Return of A is 25% Expected...

Consider the following: You have Stock A and Stock B Expected Return of A is 25% Expected Return of B is 35% Standard Deviation (volatility) of A is 17% Standard Deviation (volatility) of B is 28% a) Calculate the expected return and standard deviation of your portfolio if you invest $4,000 in A and $6,000 in B. The correlation between A and B is 0.40. b) Do you derive any diversification benefits by investing in both A and B? Why or...

Steve Palmer has been undergoing chemotherapy for liver cancer. In the past 3 months, Mr. Palmer...

Steve Palmer has been undergoing chemotherapy for liver cancer. In the past 3 months, Mr. Palmer has lost 25 pounds from his pre-cancer weight of 190 lbs. He is 6 ft 2 inches tall. He reports decreased appetite, nausea, vomiting, and dry mouth. He reports feeling full quickly and extreme fatigue. His oncologist refers him to you for suggestions on increasing his food intake. • Use your textbook to respond to the following questions (provide your responses in the Assignment...

Subjects