(Average expected return and risk) Given the holding-period returns shown here, calculate the average returns and...
(Average
expected return and
risk)
Given the holding-period returns shown here, calculate the average returns and the standard deviations for the Kaifu Corporation and for the market.
|
MONTH |
KAIFU CORP. |
MARKET |
||||
|
1 |
4% |
2% |
||||
|
2 |
7% |
2% |
||||
|
3 |
0% |
0% |
||||
|
4 |
1% |
−1% |
||||
|
(Click on the icon located on the top-right corner of the data table above in order to copy its contents into aspreadsheet.) |
||||||
a. The average monthly return for Kaifu Corporation is
%.
(Round to two decimal places.) The average monthly return for the market is
%.
(Round to two decimal places.) b. The standard deviation for Kaifu Corporation is
%.
(Round to two decimal places.) The standard deviation for the market is
%.
(Round to two decimal places.)
Homework Answers
Average return for stock=(4%+7%+0%+1%)/4=3%
Standard Deviation for stock=SQRT((4%-3%)^2+(7%-3%)^2+(0%-3%)^2+(1%-3%)^2)/SQRT(3)=3.1622777%
Average return for market=(2%+2%+0%-1%)/4=0.75%
Standard Deviation for market=SQRT((2%-0.75%)^2+(2%-0.75%)^2+(0%-0.75%)^2+(-1%-0.75%)^2)/SQRT(3)=1.5%
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