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  3. consider the following realized annual returns:

Consider the following realized annual returns: Year End Market Realized Return Stock B Realized Return 2000 21.2% 88.3% 2001 30.3% 56.4% 2002 22.3% 114.6% 2003 25.3% 68.4% 2004 -11.0% -62.8% 2005 -11.3% 52.7% 2006 -20.8% -22.0% 2007 33.1% 6.9% 2008 13.0% 9.2% 2009 7.3% -0.9% Consider the following realized annual returns: Q1...

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Question

Finance

Consider the following realized annual returns:

Year End

Market RealizedReturn

Stock B

Realized Return

2000

21.2%

88.3%

2001

30.3%

56.4%

2002

22.3%

114.6%

2003

25.3%

68.4%

2004

-11.0%

-62.8%

  1. 2005

    -11.3%

    52.7%

    2006

    -20.8%

    -22.0%

    2007

    33.1%

    6.9%

    2008

    13.0%

    9.2%

    2009

    7.3%

    -0.9%

  2. Consider the following realized annual returns:








  3. Q1 : Suppose that you want to use the10 year historical average return on the Market to forecast theexpected future return on the Market. Calculate the 95% confidenceinterval for your estimate of the expect return. Q2 : Using thedata provided in the table, calculate the average annual return,the variance of the annual returns, and the standard deviation ofthe average returns for Stock B from 2000 to 2009.

Answer & Explanation Solved by verified expert
3.8 Ratings (445 Votes)
Q 1 Please see the table below Year End Market Realized Return Square of deviation from mean Rm Rm Mean2 2000 2120 001052676 2001 3030 003748096 2002 2230 001290496 2003 2530 002062096 2004 1100 004813636 2005 1130 004946176 2006 2080 010074276 2007    See Answer
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Transcribed Image Text

Consider the following realized annual returns:Year EndMarket RealizedReturnStock BRealized Return200021.2%88.3%200130.3%56.4%200222.3%114.6%200325.3%68.4%2004-11.0%-62.8%2005-11.3%52.7%2006-20.8%-22.0%200733.1%6.9%200813.0%9.2%20097.3%-0.9%Consider the following realized annual returns:Q1 : Suppose that you want to use the10 year historical average return on the Market to forecast theexpected future return on the Market. Calculate the 95% confidenceinterval for your estimate of the expect return. Q2 : Using thedata provided in the table, calculate the average annual return,the variance of the annual returns, and the standard deviation ofthe average returns for Stock B from 2000 to 2009.

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