Over the past five years, a stock returned 8.4 percent, 8.7 percent, 3.2 percent, 1.5 percent,...

Over the past five years, a stock returned 8.4 percent, 8.7 percent, 3.2 percent, 1.5 percent, and 11.5 percent, respectively. What is the variance of these returns? A) .041302 B) .043375 C) .006824 D) .165321 E) .005459

Expert Solution

Mean = (0.084 + 0.087 + 0.032 + 0.015 + 0.115) / 5

Mean = 0.0666 or 6.66%

Variance = [(0.084 - 0.0666)² + (0.087 - 0.0666)² + (0.032 - 0.0666)² + (0.015 - 0.0666)² + (0.115 - 0.0666)²] / 5 - 1

Variance = [0.000303 + 0.000416 + 0.001197 + 0.002663 + 0.002343] / 4

Variance = 0.001731

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jeff jeffy answered 2 years ago

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