10. The annual returns on the stock of a firm during the last five years are providedbelow.YearReturn123450.08 (or 8%)0.10 (or 10%)0.15 (or 15%)0.20 (or 20%)-0.10 (or -10%)a) Find the holding period return of the stock over the five-year period.b) Compute the arithmetic average return of the stock over the five-year period.c) Calculate the geometric average return of the stock over the five-year period.d) Calculate the variance and standard deviation of the returns during this five-yearperiod. Use the arithmetic average return in (b) for your calculations in (d). Use atleast 5 decimal places for the variance computation to avoid rounding errors.

Holding period return is rate of return realized during the period of holding of stock.

Answered: Year Return 1 234 0.08 (or 8%) 0.10 (or…

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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Year Return 1 234 0.08 (or 8%) 0.10 (or 10%) 0.15 (or 15%) 0.20 (or 20%) 0.10 10%)