Given the following historical returns (HPR): Year
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Question:
Given the following historical returns (HPR):
Year Return
2017 18%
2018 -6%
2019 30%
2020 18%
- Calculate the arithmetic mean.
- Calculate the geometric mean.
- Is the geometric mean lower or higher than the arithmetic mean?
- Under what circumstances would the geometric mean equal the arithmetic mean?
- Calculate the historical standard deviation (σ).
Given the following expected returns with the indicated probabilities:
Probability Return
30% 5%
50% 10%
20% 15%
- Calculate the expected return.
- Calculate the expected standard deviation (σ).
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