Question

In: Finance

Below are returns on the stock A and S&P500 index. All numbers are in decimals (-0.0222...

Below are returns on the stock A and S&P500 index. All numbers are in decimals (-0.0222 is equivalent to -2.22%).

A S_P500
-0.0222 0.0032
-0.0048 -0.0058
0.1333 0.0434
0.0765 0.1081
-0.0161 -0.0121
0.1250 0.1400
0.0145 0.0368
-0.0475 -0.0454
0.0430 0.0577
-0.0260 -0.1374
0.0071 0.0064
0.0249 0.0186
0.0850 0.0215
-0.0624 -0.0752
0.0933 0.0365
0.0456 0.0528
-0.0632 -0.0131
0.0450 0.0009
0.0200 0.0017
0.0280 0.0985

What is the sample standard deviation of the stock A returns?

Please write an answer in decimals. For example, 12.34% would be 0.1234.
Also, round your answer to the fourth decimal.

Your Answer:

Solutions

Expert Solution

Number of sample A (A- Expected return)^2
1 -0.0222                              0.0022
2 -0.0048                              0.0009
3 0.1333                              0.0117
4 0.0765                              0.0027
5 -0.0161                              0.0017
6 0.125                              0.0100
7 0.0145                              0.0001
8 -0.0475                              0.0052
9 0.043                              0.0003
10 -0.026                              0.0026
11 0.0071                              0.0003
12 0.0249                              0.0000
13 0.085                              0.0036
14 -0.0624                              0.0076
15 0.0933                              0.0047
16 0.0456                              0.0004
17 -0.0632                              0.0078
18 0.045                              0.0004
19 0.02                              0.0000
20 0.028                              0.0000
i Total 0.499                              0.0623
ii Number of observation 20 20
iii=i/ii Therefore expected return 0.02495
Variance = =0.0623/(20-1) 0.003279
Standard deviation = square root of variance = 0.0573
Therefore answer = 0.0573

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