Question

x 7. Calculating Returns and Variability [L01) Using the following returns, calculate the arithmetic average returns, the variances, and the standard deviations for X and Y. Year 2 Returns XY 12% 25% 28 13 - 7 -27 14 34 9

Answer 1

year return NP 0.34 Avg return Varaince Standard Deviation Χ Τ Υ 10.40% 11.80% 0.015430 0.054470 12.42% 23.34% year return 0.12 0.28 0.09 -0.07 0.1 0.52 Average return 0.52/5 0.104 10.40% Deviation year return return-Average return Deviation^2 0.12 0.016000000000 0.000256 0.28 0.176000000000 0.030976 0.09 -0.014000000000 0.000196 -0.07 -0.174000000000 0.030276 -0.004000000000 0.000016 0.06172 0.14 0.59 Average return 0.59/5 0.118 11.80% Deviation year return return-Average return Deviation^2 0.25 0.132000000000 0.017424 0.34 0.222000000000 0.049284 0.13 0.012000000000 0.000144 -0.27 -0.388000000000 0.150544 0.022000000000 0.000484 0.21788 3 0.1 0.14 variance 0.06172/4 0.015430 variance 0.21788/4 0.054470 Standard deviation Standard deviation 0.054470^(1/2) 0.015430^(1/2) 0.124217551 12.42% 0.233388 23.34%