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. Five years of realized returns for Blue Llama Mining Inc. (Blue Llama) are given in the following table: 2016 2017 2018 2019 2020 Stock return 20.00% 13.60% 24.00% 33.60% 10.40% LAlso note that: 1. While Blue Llama was started 40 years ago, its common stock has been publicly traded for the past 25 years. 2. The returns on Blue Llama's equity are calculated as arithmetic returns. Given this return data, the average realized return on Blue Llama Mining Inc.'s stock is The preceding data series represents a sample of Blue Llama's historical returns. Based on this conclusion, the standard deviation of Blue Llama's historical returns is If investors expect the average realized return on Blue Llama Mining Inc.'s stock from 2016 to 2020 to continue into the future, its expected coefficient of variation (CV) is expected to equal
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. Five years of realized returns for Blue Llama Mining Inc. (Blue Llama) are given in the following table: 2016 2017 2018 2019 2020 Stock return 20.00% 13.60% 24.00% 33.60% 10.40% LAlso note that: 1. While Blue Llama was started 40 years ago, its common stock has been publicly traded for the past 25 years. 2. The returns on Blue Llama's equity are calculated as arithmetic returns. Given this return data, the average realized return on Blue Llama Mining Inc.'s stock is The preceding data series represents a sample of Blue Llama's historical returns. Based on this conclusion, the standard deviation of Blue Llama's historical returns is If investors expect the average realized return on Blue Llama Mining Inc.'s stock from 2016 to 2020 to continue into the future, its expected coefficient of variation (CV) is expected to equal
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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1.) Given this return data, the average realized return on Blue Llama Mining Inc.’s stock is _______ .
2.) The preceding data series represents a sample of Blue Llama’s historical returns. Based on this conclusion, the standard deviation of Blue Llama’s historical returns is _______ .
3.)
If investors expect the average realized return on Blue Llama Mining Inc.’s stock from 2016 to 2020 to continue into the future, its expected coefficient of variation (CV) is expected to equal _______ .
Transcribed Image Text:**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.
**Five years of realized returns for Blue Llama Mining Inc. (Blue Llama) are given in the following table:**
| Year | Stock Return |
|------|--------------|
| 2016 | 20.00% |
| 2017 | 13.60% |
| 2018 | 24.00% |
| 2019 | 33.60% |
| 2020 | 10.40% |
Also note that:
1. While Blue Llama was started 40 years ago, its common stock has been publicly traded for the past 25 years.
2. The returns on Blue Llama’s equity are calculated as arithmetic returns.
Given this return data, the average realized return on Blue Llama Mining Inc.’s stock is **__________**.
The preceding data series represents a sample of Blue Llama’s historical returns. Based on this conclusion, the standard deviation of Blue Llama’s historical returns is **__________**.
If investors expect the average realized return on Blue Llama Mining Inc.’s stock from 2016 to 2020 to continue into the future, its expected coefficient of variation (CV) is expected to equal **__________**.
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