Returns earned over a given time period are called realized returns. Historical data on realized returns is often used to estimate future results. Analysts across companies use realized stock returns to estimate the risk of a stock.Five years of realized returns for Celestial Crane Cosmetics Inc. (Crane Cosmetics) are given in the following table: 20122013201420152016Stock return23.75%16.15%28.50%39.90%12.35% Also note that:1.While Crane Cosmetics was started 40 years ago, its common stock has been publicly traded for the past 25 years.2.The returns on Crane Cosmetics's equity are calculated as arithmetic returns. Given this return data, the average realized return on Celestial Crane Cosmetics Inc.’s stock is . The preceding data series represents of Crane Cosmetics’s historical returns. Based on this conclusion, the standard deviation of Crane Cosmetics’s historical returns is . If investors expect the average realized return on Celestial Crane Cosmetics Inc.’s stock from 2012 to 2016 to continue into the future, its expected coefficient of variation (CV) is expected to equal .

1) Average Realized Return = Sum of Individual Realized returns over the Years 2012 - 16 / (Number…

Answered: Given this return data, the average…

Essentials Of Business Analytics

1st Edition

ISBN:9781285187273

Author:Camm, Jeff.

Publisher:Camm, Jeff.

Chapter11: Monte Carlo Simulation

Section: Chapter Questions

Problem 9P

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Returns earned over a given time period are called realized returns. Historical data on realized returns is often used to estimate future results. Analysts across companies use realized stock returns to estimate the risk of a stock.

Five years of realized returns for Celestial Crane Cosmetics Inc. (Crane Cosmetics) are given in the following table:

	2012	2013	2014	2015	2016
Stock return	23.75%	16.15%	28.50%	39.90%	12.35%

Also note that:

1.	While Crane Cosmetics was started 40 years ago, its common stock has been publicly traded for the past 25 years.
2.	The returns on Crane Cosmetics's equity are calculated as arithmetic returns.

Given this return data, the average realized return on Celestial Crane Cosmetics Inc.’s stock is .

The preceding data series represents of Crane Cosmetics’s historical returns. Based on this conclusion, the standard deviation of Crane Cosmetics’s historical returns is .

If investors expect the average realized return on Celestial Crane Cosmetics Inc.’s stock from 2012 to 2016 to continue into the future, its expected coefficient of variation (CV) is expected to equal .

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