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Author Question: Stocks A, B, C, and D have returns of 5, 15, 30, and 110, respectively. What is their standard ... (Read 131 times)

fagboi

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on: Jul 10, 2018
Stocks A, B, C, and D have returns of 5, 15, 30, and 110, respectively. What is their standard deviation?
 
  A) 64.25
  B) 56.75
  C) 47.78
  D) 32.05

Question 2

Over the 50-year period from 1950 to 1999, the portfolio of large U.S. stocks has had a greater variance than the portfolio of small U.S. stocks.
 
  Indicate whether the statement is true or false.


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LP

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Reply #1 on: Jul 10, 2018
Answer to Question 1

Answer: C
Explanation: C) Mean return = (5 + 15 + 30 + 110)/4 = 40, so
variance = (5 - 40)2 + (15 - 40)2 + (30 - 40)2 + (110 - 40)2/(4 -1 )
= 2,283.33. So, standard deviation = the square root of the variance = 47.78.

Answer to Question 2

Answer: FALSE
Explanation: The variance for large stocks was 278.89, and for small stocks the variance was 843.32.


fagboi

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Reply 2 on: Jul 10, 2018
YES! Correct, THANKS for helping me on my review

blakcmamba

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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