Aplia Assignment Week13 - Sp22 - Stand alone risk, CAPM, SML Attempts Keep the Highest/3 2. Measuring stand-alone risk using realized (historical) data Returns eamed 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 Blue Lama Mining Inic (BLM); Five years of realized returns for BLM are given in the following table. Remember: D 1. White BLM was started 40 years ago, its common stock has been publidy traded for the past 25 years. 2. The returns on its equity are calculated as arithmetic returns 3. The historical returns for BLM for 2014 to 2018 are: 2015 Stock return 2014 18.75 2016 2017 2018 22.50% 31.50% 9.75% 12:759 Given the preceding data, the average realized return on BMS stock is 19.05 The preceding data series represents Nistorical returns is 7.66 sample of BM's historical returns. Based on this conclusion, the standard deviation of BMS If investors expect the average reared return from 2014 to 2018 on BLM's stock to continue into the future, its coefficient of variation (CV) will be 0.52