Part 1 Calculate the annual returns. What was the arithmetic average annual return for stock B? 4+ decimals Submit Part 2 What was the variance for stock B? 4+ decimals Submit Part 3 What was the standard deviation for stock B?
Part 1 Calculate the annual returns. What was the arithmetic average annual return for stock B? 4+ decimals Submit Part 2 What was the variance for stock B? 4+ decimals Submit Part 3 What was the standard deviation for stock B?
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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Risk and return
Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.
Capital Asset Pricing Model
Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.
Question
Transcribed Image Text:### Intro
The following table shows historical beginning-of-year prices for two stocks.
| Year | Stock A | Stock B |
|------|---------|---------|
| 2014 | 33.47 | 575.35 |
| 2015 | 31.54 | 569.84 |
| 2016 | 30.91 | 594.22 |
| 2017 | 33 | 617.41 |
| 2018 | 30.7 | 542.46 |
| 2019 | 32.47 | 531.9 |
| 2020 | 28.34 | 490.58 |
| 2021 | 28.37 | 588.6 |
| 2022 | 29.25 | 641.98 |
### Part 1
**Calculate the annual returns. What was the arithmetic average annual return for stock B?**
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### Part 2
**What was the variance for stock B?**
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### Part 3
**What was the standard deviation for stock B?**
- Input field for answer (3+ decimals)
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### Part 4
**What was the covariance of returns?**
- Input field for answer (5+ decimals)
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### Part 5
**What was the correlation coefficient?**
- Input field for answer (2+ decimals)
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