The table below shows annual returns for stocks of companies X and Y. Calculate the arithmetic average returns. In addition, calculate their variances, as well as their standard deviations. Returns Year X Y 1 10% 25% 2 28 46 3 17 -9 4 -18 -23 5 19 54 Requirement 1: (a)The arithmetic average return of company X's stock is: 11.20% (b)The arithmetic average return of company Y's stock is: 18.60% Requirement 2: (a)The variance of company X's stock returns is: (Do not round intermediate calculations.) 0.024924 (b)The variance of company Y's stock returns is: (Do not round intermediate calculations.) 0.091878 Requirement 3: (a)The standard deviation of company X's stock returns is: (Do not round intermediate calculations.) 14.21% (b)The standard deviation of company Y's stock returns is: (Do not round intermediate calculations.) 27.28%
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The returns for company X are 10, 28, 17, -18, 19. The sum of the returns is $10 + 28 + 17 + (-18) + 19 = 56$. The arithmetic average return is $\frac{56}{5} = 11.2$. Show more…
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