Suppose the returns on common stocks are (in decimals) .1370, .3580, .4514, and .0888, respectively. As we
Question:
Suppose the returns on common stocks are (in decimals) .1370, .3580, .4514, and −.0888, respectively. As we calculated in Example 10.2, the average return is .2144. The variance of this sample is computed as follows:
Transcribed Image Text:
Var = †[(R₁ − R)² + (R₂ − R)² + (R3 − R)² + (R4 − R)²] T- 0582= [(1370 -.2144)²+(.3580 - 2144)² + (.4514.2144)² + (-0888 - 2144)²] SD = √.0582 = 2413, or 24.13%
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Corporate Finance
ISBN: 9781265533199
13th International Edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
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