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A: Here, Historical Average Annual Return is 5.7% Standard Deviation is 18.3%
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A: Returns 5% -4% -3% 12% 6.50%
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Q: Suppose the returns on an asset are normally distributed. The historical average annua return for…
A: Here,HistoricalAverage Annual Return is 5.7%Standard Deviation is 18.3%
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A: To Find: Standard deviation of returns
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Q: Calculate the standard deviation for the following returns:
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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.
Use the following information to compute the standard deviation of returns:
Yearly Returns
| Year | Return (%) |
|---|---|
| 1 | 19 |
| 2 | 1 |
| 3 | 10 |
| 4 | 26 |
| 5 | 4 |
12%
10.42%
0.87%
108.5%
Step by step
Solved in 3 steps with 2 images
- Calculate the arithmetic average for the following returns: Year Return O 2.4 % O 2.2% O 3.1% O 3.4% Calculate the geometric average for the following returns: Year Return O 2.2% O 2.4% O 3.1% O 3.4% Calculate the standard deviation for the following returns: Year Return O 8.4% O 8.1% O 7.6% O 7.3% 2017 12.03% 2017 12.03% 2017 12.03% 2018 -8.24% 2018 -8.24% 2018 -8.24% 2019 1.34% 2019 1.34% 2019 1.34% 2020 4.55% 2020 4.55% 2020 4.55%Use the following returns for X and Y. Returns Year X Y 1. 21.8% 26.4% 2. -16.8 -3.8 3. 9.8 28.4 4. 19.8 -14.6 5. 4.8. 32.4 a. Calculate the average returns for X and Y. (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. (Do not round intermediate calculations and round your answers to 6 decimal places, e.g., 32.161616.) c. Calculate the standard deviations for X and Y. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)What is the geometric average return of the following quarterly returns: 7%, 5%, 8%, and 8% ? Enter answer in percents, to two decimal places.
- Calculate the standard deviation of the following returns. Year Return 1 0.01 2 0.27 3 0.02 4 0.02 5 0.22 Enter the answer with 4 decimals, e.g. 0.1234.Which one of the following best describes an arithmetic average return? Multiple Choice A. Total return divided by N − 1, where N equals the number of individual returns B. Average compound return earned per year over a multiyear period C. Total compound return divided by the number of individual returns D. Return earned in an average year over a multiyear period E. Positive square root of the average compound returnCalculate the standard deviation for the following returns: Year 2017 2018 2019 2020 Return 12.03% -8.24% 1.34% 4.55% Group of answer choices 8.4% 8.1% 7.6% 7.3%
- es Suppose the returns on an asset are normally distributed. The historical average annual return for the asset was 5.7 percent and the standard deviation was 18.3 percent. a. What is the probability that your return on this asset will be less than -4.1 percent in a given year? Use the NORMDIST function in Excel® to answer this question. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What range of returns would you expect to see 95 percent of the time? (Enter your answers for the range from lowest to highest. A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) c. What range of returns would you expect to see 99 percent of the time? (Enter your answers for the range from lowest to highest. A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter…Calculate the standard deviation of this scenario Outcome 1: Recession. Probability = 40% . Return = 7.38%. Outcome 1: Recovery. Probability = 60%. Return = 17.27 %. Answer in % terms w/o % sign and to 4 decimal places (1.2345)Which one of the following is defined as the average compound return earned per year over a multiyear period? Multiple Choice A Geometric average return B Variance of returns C Standard deviation of returns D Arithmetic average return E. Normal distribution of returns
- Suppose the returns on an asset are normally distributed. The historical average annual return for the asset was 5.7 percent and the standard deviation was 18.3 percent. a. What is the probability that your return on this asset will be less than –4.1 percent in a given year? Use the NORMDIST function in Excel® to answer this question. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What range of returns would you expect to see 95 percent of the time? (Enter your answers for the range from lowest to highest. A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) c. What range of returns would you expect to see 99 percent of the time? (Enter your answers for the range from lowest to highest. A negative answer should be indicated by a minus sign. Do not round intermediate calculations…Four assets have the following distribution of returns. Probability Rate of return (%)Occurrence A B C D0.1 10.0 6.0 14.0 2.00.2 10.0 8.0 12.0 6.00.4 10.0 10.0 10.0 9.00.2 10.0 12.0 8.0 15.00.1 10.0 14.0 6.0 20.0 In each asset alculate The expected rate of return, standard deviation, variance coefficient of variationConsider the following POPULATION of returns: 5%, -4%, -3%, and 12%. What is the standard deviation of this population of returns? O A. 0.42% O B. 0.56% OC. 6.50% O D. 7.51%