Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
4th Edition
ISBN: 9780134083278
Author: Jonathan Berk, Peter DeMarzo
Publisher: PEARSON
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Textbook Question
Chapter 10, Problem 7P
The last four years of returns for a stock are as follows:
- a. What is the average annual return?
- b. What is the variance of the stock’s returns?
- c. What is the standard deviation of the stock’s returns?
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You’ve observed the following returns on Pine Computer’s stock over the past five years: −29.1 percent, 16.4 percent, 35.8 percent, 3.7 percent, and 22.7 percent.
What was the arithmetic average return on the stock over this five-year period?
What was the variance of the returns over this period?
What was the standard deviation of the returns over this period?
You’ve observed the following returns on Yamauchi Corporation’s stock over the past five years: –29.7 percent, 16.8 percent, 36.6 percent, 3.9 percent, and 22.9 percent.
a.
What was the arithmetic average return on the stock over this five-year period?
b.
What was the variance of the returns over this period?
c.
What was the standard deviation of the returns over this period?
The last four years of returns for a stock are as shown here:
LOADING...
.
a. What is the average annual return?
b. What is the variance of the stock's returns?
c. What is the standard deviation of the stock's returns?
Note:
Notice that the average return and standard deviation must be entered in percentage format. The variance must be entered in decimal format.
Question content area bottom
Part 1
a. What is the average annual return?
The average return is
enter your response here%.
(Round to two decimal places.)
Part 2
b. What is the variance of the stock's returns?
The variance of the returns is
enter your response here.
(Round to five decimal places.)
Part 3
c. What is the standard deviation of the stock's returns?
The standard deviation is
enter your response here%.
(Round to two decimal places.)
figure
Year: 1, 2, 3, 4
Return: -4.2%, +27.9%, +11.8%, +3.8%
Chapter 10 Solutions
Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
Ch. 10.1 - For an investment horizon from 1926 to 2012, which...Ch. 10.1 - For an investment horizon of just one year, which...Ch. 10.2 - Prob. 1CCCh. 10.2 - Prob. 2CCCh. 10.3 - How do we estimate the average annual return of an...Ch. 10.3 - Prob. 2CCCh. 10.4 - Prob. 1CCCh. 10.4 - Do expected returns of well-diversified large...Ch. 10.4 - Do expected returns for Individual stocks appear...Ch. 10.5 - What is the difference between common risk and...
Ch. 10.5 - Prob. 2CCCh. 10.6 - Explain why the risk premium of diversifiable risk...Ch. 10.6 - Why is the risk premium of a security determined...Ch. 10.7 - What is the market portfolio?Ch. 10.7 - Define the beta of a security.Ch. 10.8 - Prob. 1CCCh. 10.8 - Prob. 2CCCh. 10 - The figure on page informalfigure shows the...Ch. 10 - Prob. 2PCh. 10 - Prob. 3PCh. 10 - Prob. 4PCh. 10 - Prob. 5PCh. 10 - Prob. 6PCh. 10 - The last four years of returns for a stock are as...Ch. 10 - Prob. 9PCh. 10 - Prob. 10PCh. 10 - Prob. 11PCh. 10 - How does the relationship between the average...Ch. 10 - Consider two local banks. Bank A has 100 loans...Ch. 10 - Prob. 21PCh. 10 - Prob. 22PCh. 10 - Consider an economy with two types of firms, S and...Ch. 10 - Prob. 24PCh. 10 - Explain why the risk premium of a stock does not...Ch. 10 - Prob. 26PCh. 10 - Prob. 27PCh. 10 - What is an efficient portfolio?Ch. 10 - What does the beta of a stock measure?Ch. 10 - Prob. 31PCh. 10 - Prob. 32PCh. 10 - Prob. 33PCh. 10 - Suppose the risk-free interest rate is 4%. a. i....Ch. 10 - Prob. 35PCh. 10 - Prob. 36PCh. 10 - Suppose the market risk premium is 6.5% and the...Ch. 10 - Prob. 38P
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- he last four years of returns for a stock are as shown here: LOADING... . a. What is the average annual return? b. What is the variance of the stock's returns? c. What is the standard deviation of the stock's returns? Note: Notice that the average return and standard deviation must be entered in percentage format. The variance must be entered in decimal format. Question content area bottom Part 1 a. What is the average annual return? The average return is enter your response here%. (Round to two decimal places.) Part 2 b. What is the variance of the stock's returns? The variance of the returns is enter your response here. (Round to five decimal places.) Part 3 c. What is the standard deviation of the stock's returns? The standard deviation is enter your response here%. (Round to two decimal places.) Time Remaining: 00:26:16 pop-up content starts Data table (Click on the following icon in order…arrow_forwardHere are the returns on two stocks. A. Calculate the variance and standard deviation of each stock. Which stock is riskier if held on its own? B. Now calculate the returns in each month of a portfolio that invests an equal amount each month in the two stocks C. Is the variance more or less than halfway between the variance of the two Individual stocks?arrow_forwardA stock had returns of 18.58 percent, −5.58 percent, and 20.81 percent for the past three years. What is the variance of the returns?arrow_forward
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- You’ve observed the following returns on Yamauchi Corporation’s stock over the past five years: –24.6 percent, 13.4 percent, 29.8 percent, 2.2 percent, and 21.2 percent. What was the variance of the returns over this period?arrow_forwardStock Z has the following returns for last five years. Calculate the arithmetic average returnand geometric return for the stock.Returns: 10%, 15%, -8%, -9% and 12%arrow_forwardThe stock yields for three years are given as 0.15, -0.10 and 0.12, respectively. Which is the geometric mean return accordingly?arrow_forward
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