Answer #10 #9 is provided below

9. Calculating Returns and Variability Youve observed the following returns on Yamauchi Corporations stock over the past five years: 10 percent, 24 percent, 21 percent, 11 percent, and 8 percent.

a. What was the arithmetic average return on the stock over this five-year period?

b. What was the variance of the returns over this period? The standard deviation?

10. Calculating Real Returns and Risk Premiums For Problem 9, suppose the average inflation rate over this period was 3.1 percent and the average T-bill rate over the period was 4.1 percent.

a. What was the average real return on the stock?

b. What was the average nominal risk premium on the stock?

Answer: 9) \begin{tabular}{|r|r|r|r|} \hline Year & return (x) & (x-Mean) & (x-Mean)2 \\ \hline 1 & 10% & 20.80% & 4.3264% \\ \hline 2 & 24% & 13.20% & 1.7424% \\ \hline 3 & 21% & 10.20% & 1.0404% \\ \hline 4 & 11% & 0.20% & 0.0004% \\ \hline 5 & 8% & 2.80% & 0.0784% \\ \hline Sum & 54% & & 7.1880% \\ \hline \end{tabular} \begin{tabular}{|c|} \hline Arithmetic Average Return (Mean) = Sum of Returns/ Number of Years \\ \hline Arithmetic Average Return (Mean) =54%/5 Years \\ \hline Arithmetic Average Return (Mean) =10.8% \\ \hline \end{tabular} Variance=n1Sumof(xmean)2Variance=517.1880%Variance=0.01797(Or)1.7970% \begin{tabular}{|c|} \hline Standard deviation = Square root of (variance) \\ \hline Standard deviation =v0.01797 \\ \hline \multicolumn{2}{|c|}{ Standard deviation =0.1341 (Or) 13.41\% } \\ \hline \end{tabular} \begin{tabular}{|c|} \hline a) Arithmetic Average Return (Mean) =10.8% \\ \hline b) Variance = ' 0.01797 (Or) 1.7970% \\ \hline c) Standard deviation =0.1341 (Or) 13.41% \\ \hline \end{tabular}