Using the annual returns for years 35 in Spreadsheet 5.2: a. Compute the arithmetic average return. b.
Question:
Using the annual returns for years 3–5 in Spreadsheet 5.2:
a. Compute the arithmetic average return.
b. Compute the geometric average return.
c. Compute the standard deviation of returns.
d. Compute the Sharpe ratio, assuming the risk-free rate was 6% per year.
Transcribed Image Text:
B Implicit E F 1 Year Probability HPR (decimal) Squared Deviation Gross Return Wealth =1+ HPR Index* 2 3 4 123. 0.20 -0.1189 0.0196 0.8811 0.8811 0.20 -0.2210 0.0586 0.20 0.2869 0.0707 0.7790 0.6864 1.2869 0.8833 5 6 4 5 0.20 0.1088 0.0077 0.20 0.0491 0.0008 1.1088 0.9794 1.0491 1.0275 7 Arithmetic average = AVERAGE(C2:C6) 0.0210 8 Expected HPR 9 Variance 10 Standard deviation 11 Standard deviation 12 Std dev (df 4) SUMPRODUCT(B2:B6, D2:D6) SQRT(D9) STDEV.P(C2:C6) SUMPRODUCT(B2:B6, C2:C6) 0.0210 0.0315 0.1.774 0.1.774 13 Std dev (df = 4) SQRT(D9*5/4) STDEV.S(C2:C6) 0.1983 0.1983 0.0054 14 Geometric avg return F6^(1/5)-1 15 16 The wealth index is the cumulative value of $1 invested at the beginning of the sample period. Spreadsheet 5.2 Time series of holding-period returns
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 100% (QA)
a Arithmetic return 132869 131088 ...View the full answer
Answered By
Divya Munir
I hold M.Sc and M.Phil degrees in mathematics from CCS University, India and also have a MS degree in information management from Asian institute of technology, Bangkok, Thailand. I have worked at a international school in Bangkok as a IT teacher. Presently, I am working from home as a online Math/Statistics tutor. I have more than 10 years of online tutoring experience. My students have always excelled in their studies.
4.90+
0 Reviews
10+ Question Solved
Related Book For
ISE Investments
ISBN: 9781260571158
12th International Edition
Authors: Zvi Bodie, Alex Kane, Alan Marcus
Question Posted:
Students also viewed these Business questions
-
Which of the following are intensive state variables? Select all that apply. Mass Density O Molar Volume O Temperature Concentration
-
"internet radios" for streaming audio, and personal video recorders and players. Describe design and evaluation processes that could be used by a start-up company to improve the usability of such...
-
CoursHeroTranscribedText: A 5-year loan in the amount of $48,000 is to be repaid in equal annual payments. What is the remaining principal balance after the third payment if the interest rate is 5...
-
George bought the following amounts of Stock A over the years: (Loss amounts should be indicated with a minus sign.) Number of Adjusted Basis $ 7,200 6,270 Date Purchased Shares Stock A 11/21/1993...
-
(a) An electron in a hydrogen atom jumps from the n = 6 orbit to the n = 2 orbit and emits a photon. Will its de Broglie wavelength increase, decrease, or stay the same after the jump? (b) Calculate...
-
log 13.2 Use a calculator to evaluate each expression. Round your answers to three decimal places.
-
Consider the following cash flow profile and assume MARR is 10 percent/year and the finance rate is 4 percent/ year. a. Determine the MIRR for this project. b. Is this project economically...
-
On January 1, 2012, Crume Incorporated issued bonds with a face value of $100,000, a stated rate of interest of 9 percent, and a five-year term to maturity. Interest is payable in cash on December 31...
-
23. If an item retails for $320 after being marked up by 85%, what was the dollar amount of the cost?
-
What is the probability that the return on the index in Example 5.8 will be below 15%? Example 5.8 Normal Distribution Function in Excel Suppose the monthly rate of return on the S&P 500 is...
-
You invest $1 million at the beginning of 2025 in an S&P 500 stock-index fund. If the rate of return in 2025 is 40%, what rate of return in 2026 will be necessary for your portfolio to recover to its...
-
What are the pros and cons of doing business in a culture characterized as individualistic?
-
Beta Corporation is making plans for the next fiscal year. Betas current sales are $3.5 million, expected to increase to $5 million, based on current assets of $2.4 million and fixed assets of $2.5...
-
Design another experiment using difference-indifferences to understand the effect of a policy change at your college.
-
The Daher Trucking Company needs to expand its fleet by 20 percent to meet the demands of two major contracts it just received to transport aeronautic equipment from manufacturing facilities...
-
Garr Company estimates its investment to be $0.25 in assets for each dollar of new sales. By each dollar of additional sales $0.04 profits will be produced and $0.01 can be reinvested in the company....
-
Grays Accounting pays Rita Flores $ 51,000 per year. Flores works 1,000 hours per year. Requirements 1. What is the hourly cost to Gray Accounting of employing Flores? Assume a 25-hour week and a...
-
Liquid water with density is filled on top of a thin piston in a cylinder with cross-sectional area A and total height H. Air is let in under the piston so it pushes up, spilling the...
-
What mass of KBr (in grams) should you use to make 350.0 mL of a 1.30 M KBr solution?
-
Which fluctuate more long-term or short-term interest rates? Why?
-
Suppose the population of Area Y is relatively young while that of Area O is relatively old, but everything else about the two areas is equal. a. Would interest rates likely be the same or different...
-
Suppose a new and much more liberal Congress and administration were elected, and their first order of business was to take away the independence of the Federal Reserve System, and to force the Fed...
-
An insurance agent has claimed that the average age of policy holders who insure through him is less than the average for all the agents, which is 35 years. A random sample of 40 policy holders who...
-
Evaluate 15. y = 2x3 - 4x, x = 2.5, Ax = 0.05 16. y = x - x, x = 3.2, Ax = 0.08
-
Given is a graph of a portion of the postage function, which depicts the cost (in cents) of mailing a letter, p. versus the weight (in ounces) of the letter, x. Find each limit, if it exists: p(x),...
Study smarter with the SolutionInn App