Returns Year X Y 1 20 % 15 % 2 23 35 3 9 14 4 − 16 − 21 5 10 25 Using the returns shown above, calculate the arithmetic average returns, the variances, and the standard deviations for X and Y. X Y Average returns % % Variances Standard deviations % %
Returns Year X Y 1 20 % 15 % 2 23 35 3 9 14 4 − 16 − 21 5 10 25 Using the returns shown above, calculate the arithmetic average returns, the variances, and the standard deviations for X and Y. X Y Average returns % % Variances Standard deviations % %
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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Problem 10-7 Calculating Returns and Variability
| Returns | |||||||
| Year | X | Y | |||||
| 1 | 20 | % | 15 | % | |||
| 2 | 23 | 35 | |||||
| 3 | 9 | 14 | |||||
| 4 | − | 16 | − | 21 | |||
| 5 | 10 | 25 | |||||
| Using the returns shown above, calculate the arithmetic average returns, the variances, and the standard deviations for X and Y. |
X Y
Average returns % %
Variances
Standard deviations % %
Expert Solution
Step 1
Standard Deviation:
- It represents the dispersion in a set of data that is relative to the average or means.
- Standard deviation is computed by taking the variance's square root.
- In finance terms, standard deviation represents the asset's relative riskiness.
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