3. Measuring standalone risk using realized (historical) data Returns earned over a given time period are called realized returns. Historical data on realized returns is often used to estimate future results. Analysts across companies use realized stock returns to estimate the risk of a stock. Consider the case of Happy Dog Soap Inc. (HDS): Five years of realized returns for HDS are given in the following table. Remember: 1. While HDS was started 40 years ago, its common stock has been publicly traded for the past 25 years. 2. The returns on its equity are calculated as arithmetic returns. 3. The historical returns for HDS for 2012 to 2016 are: 2012 2013 2014 2015 2016 Stock return 12.50% 8.50% 15.00% 21.00% 6.50% Given the preceding data, the average realized return on HDS's stock is The preceding data series represents of HDS's historical returns. Based on this conclusion, the standard deviation of HDS's 1. While HDS was started 40 years ago, its common stock has been publicly traded for the past 25 years. 2. The returns on its equity are calculated as arithmetic returns. 3. The historical returns for HDS for 2012 to 2016 are: 2012 2013 2014 2015 2016 Stock return 12.50% 8.50% 15.00% 21.00% 6.50% Given the preceding data, the average realized return on HDS's stock is of HDS's historical returns. Based on this conclusion, the standard deviation of HDS's The preceding data series represents historical returns is If investors expect the average realized return from 2012 to 2016 on HDS's stock to continue into the future, its coefficient of variation (CV) will be Grade It Now Save & Continue Continue without saving 1. While HDS was started 40 years ago, its common stock has been publicly traded for the past 25 years. 2. The returns on its equity are calculated as arithmetic returns. 3. The historical returns for HDS for 2012 to 2016 are: 2012 2013 2014 2015 2016 Stock return 12.50% 8.50% 15.00% 21.00% 6.50% Given the preceding data, the average realized return on HDS's stock is 31.75% of HDS's hist Ins. Based on this conclusion, the standard deviation of HDS's The preceding data series represents historical returns is 39.37% 25.40% If investors expect the average realized return from 2012 to 2016 on HD continue into the future, its coefficient of variation (CV) will be 12.70% Grade It Now Save & Continue Continue without saving 1. While HDS was started 40 years ago, its common stock has been publicly traded for the past 25 years. 2. The returns on its equity are calculated as arithmetic returns. 3. The historical returns for HDS for 2012 to 2016 are: 2012 2013 2014 2015 2016 Stock return 12.50% 8.50% 15.00% 21.00% 6.50% the population the universe Given the preceding data, the averag bn HDS's stock is a sample of HDS's historical returns. Based on this conclusion, the standard deviation of HDS's The preceding data series represents historical returns is If investors expect the average realized return from 2012 to 2016 on HDS's stock to continue into the future, its coefficient of variation (CV) will be Grade It Now Save & Continue Continue without saving 1. While HDS was started 40 years ago, its common stock has been publicly traded for the past 25 years. 2. The returns on its equity are calculated as arithmetic returns. 3. The historical returns for HDS for 2012 to 2016 are: 2012 2013 2014 2015 2016 Stock return 12 500 8.50% 15.00% 21.00% 6.50% 5.10% 7.71% Given the preceding 4.39% average realized return on HDS's stock is 5.71% resents of HDS's historical returns. Based on this conclusion, the standard deviation of HDS's The preceding data historical returns is If investors expect the average realized return from 2012 to 2016 on HDS's stock to continue into the future, its coefficient of variation (CV) will be Grade It Now Save & Continue Continue without saving 1. While HDS was started 40 years ago, its common stock has been publicly traded for the past 25 years. 2. The returns on its equity are calculated as arithmetic returns. 3. The historical returns for HDS for 2012 to 2016 are: 2012 2013 2014 2015 2016 Stock return 12.50% 8.50% 15.00% 21.00% 6.50% 0.83 le preceding data, the average realized return on HDS's stock is 0.38 Jeding data series represents H 0.52 returns is of HDS's historical returns. Based on this conclusion, the standard deviation of HDS's 0.45 brs expect the average realized return from 2012 to 2016 on HDS's stock to continue into the future, its coefficient of variation (CV) will be Grade It Now Save & Continue Continue without saving