Question

A stock had returns of 17.88 percent, −5.16 percent, and 20.39 percent for the past three years. What is the variance of the returns?

Answer 1

Answer:

Variance of the return = 0.01983

Explanation:

$S^{2}$= Σ$(X-X)^{2}$/ N - 1

Mean return = 17.88% + -5.16% + 20.39% = 11.0367%  

Variance = [(17.88% - 11.0367%)2 + (-5.16% - 11.0367%)2 + (20.39% - 11.0367%)2] /(3 - 1)

Variance = [0.004683 + 0.026233 + 0.008748]/2

Variance = 0.01983