According to Megaworld Corporation, their returns over the last three years have been 7 percent, 13 percent, and 10 percent, respectively. Calculate the variance and standard deviation of the returns using the following formulas: Variance (m) = expected value of (m-rm)² Standard deviation of rm = √variance(rm). 124.00 and 11.10 percent O 30.00 and 10.00 percent O 6.00 and 2.45 percent

According to Megaworld Corporation, their returns over the last three years have been 7 percent, 13 percent, and 10 percent, respectively. Calculate the variance and standard deviation of the returns using the following formulas: Variance (m) = expected value of (m-rm)² Standard deviation of rm = √variance(rm). 124.00 and 11.10 percent O 30.00 and 10.00 percent O 6.00 and 2.45 percent

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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We have 50 years of annual data on (detrended) ex post prices P∗ t and on (detrended) actual stock prices Pt . We find that the sample variances (svar) are as follows: svar(P∗ t ) = 120 and svar(Pt) = 80. What does this tell us and why?
Consider Microsoft Corporation (MSFT) and Meta Platforms, Inc. (META) that have returns variances of 6.25% and 3.24%, respectively. Calculate the standard deviation of portfolio returns for an equal-weighted portfolio of the two assets when their correlation of returns is 0. A. 24.71% B. 19.20% C. 15.40% D. 10.28%
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