Use the following returns for X and Y. Year 1 Returns X 21.2% 2 -16.2 3 4 5 9.2 18.4 4.2 Y 24.6% -3.2 26.6 -13.4 30.6 a. Calculate the average returns for X and Y. Note: Do not round intermediate calculations and ent places, e.g., 32.16.
Use the following returns for X and Y. Year 1 Returns X 21.2% 2 -16.2 3 4 5 9.2 18.4 4.2 Y 24.6% -3.2 26.6 -13.4 30.6 a. Calculate the average returns for X and Y. Note: Do not round intermediate calculations and ent places, e.g., 32.16.
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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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
![Problem 10-7 Calculating Returns and Variability [LO 1]
Use the following returns for X and Y.
Year
1
2
3
4
5
Returns
X
21.2%
-16.2
9.2
18.4
4.2
Y
24.6%
-3.2
26.6
-13.4
30.6
a. Calculate the average returns for X and Y.
Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal
places, e.g., 32.16.
b. Calculate the variances for X and Y.
Note: Do not round intermediate calculations and round your answers to 6 decimal places, e.g., .161616.
c. Calculate the standard deviations for X and Y.
Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal
places, e.g., 32.16.
a. Average return
b. Variance
c. Standard deviation
X
7.36%
%
Y
13.04 %
%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4100da26-36bd-43a6-aafd-ee8e0ffe886a%2F45ab4a80-85fa-481b-bc0d-76724c364685%2Ft3pubw7_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 10-7 Calculating Returns and Variability [LO 1]
Use the following returns for X and Y.
Year
1
2
3
4
5
Returns
X
21.2%
-16.2
9.2
18.4
4.2
Y
24.6%
-3.2
26.6
-13.4
30.6
a. Calculate the average returns for X and Y.
Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal
places, e.g., 32.16.
b. Calculate the variances for X and Y.
Note: Do not round intermediate calculations and round your answers to 6 decimal places, e.g., .161616.
c. Calculate the standard deviations for X and Y.
Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal
places, e.g., 32.16.
a. Average return
b. Variance
c. Standard deviation
X
7.36%
%
Y
13.04 %
%
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