The following historical time series of data on a security returns is available from 2016 to 2020:
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Question:
The following historical time series of data on a security returns is available from 2016 to 2020:
Year | Return on a Security, % |
2016 | 35 |
2017 | 20 |
2018 | 15 |
2019 | 18 |
2020 | -8 |
Required:
- Calculate the expected return and standard deviation of the returns from the above discreate distribution. (6 marks)
- An analyst predicts the following possibilities on a security returns next year:
State | Probability | Return on a Security, % |
Boom | 0.20 | 30 |
Good | 0.60 | 12.5 |
Crash | 0.20 | -12.5 |
Required:
Calculate the expected return and standard deviation of the returns from the above probability distribution the security.
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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