Question

3. Measuring standalone risk using realized (historical) data 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. Consider the case of Blue Llama Mining Inc. (BLM): Five years of realized returns for BLM are given in the following table. Remember: 1. While BLM was started 40 years ago, its common stock has been publicly traded for the past 25 years. 2. The returns on its equity are calculated as arithmetic returns. 3. The historical returns for BLM for 2012 to 2016 are: 2012 20.00% 2013 13.60% 2014 24.00% 2015 33.60% 2016 10.40% Stock return Given the preceding data, the average realized return on BLM's stock is of BLM's historical returns. Based on this conclusion, the standard deviation of BLM's The preceding data series represents historical returns is If investors expect the average realized return from 2012 to 2016 on BLM's stock to continue into the future, its coefficient of variation (CV) will be

Answer 1

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- 2x % Cut STATS - Microsoft Excel (Product Activation Failed) File Home Insert Page Layout Formulas Data Review View Add-Ins Σ AutoSum : A Calibri -11AA = = = Dr Wrap Text General E Copy Fill 2 m Paste BI U D- DA Merge & Center - Format Painter $ % , Conditional Format :.: Cell Insert Delete Format Sort & Find & Formatting as Table Styles Clear Filter Select Clipboard Font Alignment Number Styles Cells Editing BH166 BB BC BD BE BE BG B H BL BJ 147 148 149 YEAR RETURN (%) 150 2012 20.00 151 2013 13.60 152 2104 24.00 153 2015 33.60 154 2016 10.40 EXCEL FORMULA 155 AVERAGE RETURN 20.32 % AVERAGE(BF150:BF154) 156 STANDARD DEVIATION 9.1319 % STDEV.S(BF150:BF154) 157 158 ANS 1 THE AVERAGE REALISED RETURN ON STOCK IS 20.32 % 159 160 ANS 2 THE PRECEDING DATA SERIES REPRESENTS SAMPLE 161 162 9.13 % (ROUNDED TO 2 DECIMAL) 163 164 ANS 4 CV = STANDARD DEVIATION/MEAN 0.45 19.70/20.32] (ROUNDED TO 2 DECIMAL) 165 166 167 P V FV DIVIDEND EMV MEAN STDV assignment DEAR Sheet2 COV TIME SERIES corr REGRESSION range CAMERA TREND fregMATRIX INTERVAL, NORMAL HYPOTHI Rea ferences BO! 120% . EK * "DENG ANS 3 STANDARD DEVIATION OF HISTORICAL RETURNS IS H 1 + 04:52 26-10-2019