Question

Given the following historical returns, what is the variance?Year Return1 7 percent2 3 percent3 19 percent4 -11 percent5 -1 percentA) .009664B) .012080C) .034018D) .039644E) .048322

Answer 1

Answer:

option (B) 0.01208

Explanation:

Data provided in the question:

Year   Return

1              7% = 0.07

2             3%  = 0.03

3             19% = 0.19

4             -11% = -0.11

5             -1% = -0.01

Now,

Mean = [ Sum of all observations ] ÷ [Total number of observations]

or

Mean = [ 0.07 + 0.03 + 0.19 - 0.11 - 0.01 ] ÷ 5

or

Mean = 0.034

data           data-mean           (data - mean)²

0.07                0.036                  0.001296

0.03               -0.004                  0.000016

0.19                 0.156                  0.024336

-0.11                -0.144                  0.020736

-0.01               -0.044                  0.001936

=========================================

                    ∑ (Data - mean)² = 0.04832

variance = $\frac{ \sum{\left(x_i - \overline{X}\right)^2 }}{n-1}$

or

variance = $\frac{0.04832}{5-1}$

or

Variance = 0.01208

Hence,

The correct answer is option (B) 0.01208

Answer 2

Answer:

i literly have that question n there is no answe rhere

Explanation: