Ch $08-$ Assignment $-$ Risk and Rates of Return

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 Blue Llama Mining Inc. $($BLM$)$:

Five years of realized returns for BLM are given in the following table. Remember:

While BLM was started $40$ years ago, its common stock has been publicly traded for the past $25$ years.

The returns on its equity are calculated as arithmetic returns.

The historical returns for BLM for $2014$ to $2018$ are:

$\backslash$table$[[,2014,2015,2016,2017,2018],[$Stock return,$15\mathrm{.}00\%,10\mathrm{.}20\%,18\mathrm{.}00\%,25\mathrm{.}20\%,7\mathrm{.}80\%$