Answered: Returns Year X Y 1 20 % 15 %…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Problem 10-7 Calculating Returns and Variability

	Returns
Year	X	Y
1		20	%		15	%
2		23			35
3		9			14
4	−	16		−	21
5		10			25

Using the returns shown above, calculate the arithmetic average returns, the variances, and the standard deviations for X and Y.

X Y

Average returns % %

Variances

Standard deviations % %

Expert Solution

Step 1

Standard Deviation:

It represents the dispersion in a set of data that is relative to the average or means.
Standard deviation is computed by taking the variance's square root.
In finance terms, standard deviation represents the asset's relative riskiness.

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10.7        Calculating Returns and Variability Using the following returns, calculate the arithmetic average returns, the variances, and the standard deviations for X and Y:                                                                                                 Returns                 Year                                                       X                             Y                 1                                                              12%                        14%                 2                                                              24                           29                 3                                                              -27                          -33                 4                                                              14                           17                 5                                                              19                           37
Year Returns X Y 1 11% 18% 2 25 26 3 11 10 4 −18 −23 5 10 17    Using the returns shown above, calculate the arithmetic average returns, the variances, and the standard deviations for X and Y. (Do not round intermediate calculations. Enter your average return and standard deviation answers as a percent rounded to 2 decimal places, e.g., 32.16, and round the variance answers to 5 decimal places, e.g., .16161.) X Y Average returns % % Variances Standard deviations % %
Returns Year X Y 1 16 % 20 % 2 19 31 3 10 15 4 – 8 – 17 5 10 21    Using the returns shown above, calculate the arithmetic average returns, the variances, and the standard deviations for X and Y. (Do not round intermediate calculations. Enter your average return and standard deviation as a percent rounded to 2 decimal places, e.g., 32.16, and round the variance to 5 decimal places, e.g., 32.16161.)
Returns Year X y 1 17 % 20 % 2 20 32 3 11 15 4 – 7 – 18 5 10 22 Using the returns shown above, calculate the arithmetic average returns, the variances, and the standard deviations for X and Y.
17. The cost price factor shows a variance of: a) P95,250 unfavorable b) P61,500 unfavorable c) P42,000 unfavorable d) P33,750 favorable
Case 10-17 (Algo) Working Backwards from Variance Data )LO10-1, LO10-2, LO10-3)
What is the variance of the following returns? State probability return Boom .2 .75 normal .55 .25 recession .15 -.1 depression .1 -.5 a. .0413 b. .01239 c. .1944 d. .2601 e. .3519
1. Calculate the Expected Return and Risk measured in terms of standard deviation and Variance relating to the following information of a Investment avenue: Return in Percentage: -15-10-5+5+10+15 Probability:.10.15.20.20.25.10
Part a State Pr(a) ra Pr(b) rb 1 0.2 10% 0.25 12% 2 0.6 15% 0.40 20% 3 0.2 20% 0.35 18% Given the probability distribution above, determine (Calculate) and compare the: Expected return (means) Variance Standard deviation Part b How important is risk to returns and what are the key elements that must be analyzed in this regard before an investment decision is made? Discuss in no more than 200 words.
Given the following historical returns, what is the variance? Year 1 = 9%; year 2 = -11%; year 3 = 8%; year 4 = -12%; and year 5 = 9%. a).0134 b) .0075 c) .0075 d) .0112 e) .0112
Fast pls solve this question correctly in 5 min pls I will give u like for sure Surbh A: Calculate the arithmetic average return. B: Calculate the geometric average return C: Calculate the sample variance for the returns D: Calculate the sample standard deviation for the returns Round to 4 decimal places.
. Refer to the information below; Outcome Probability Return Recession 40% -25% Expansion 25% 20% Boom 35% 45% A). What is the expected variance, & Standard deviation? B) Graphically illustrate the above findings in both probability distribution and continuous probability distribution curves, and provide appropriate narratives of the graphs.

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Returns Year X Y 1 20 % 15 % 2 23 35 3 9 14 4 − 16 − 21 5 10 25 Using the returns shown above, calculate the arithmetic average returns, the variances, and the standard deviations for X and Y. X Y Average returns % % Variances Standard deviations % %

Problem 10-7 Calculating Returns and Variability