Chapter_10_sol_students

0450 b3400 c1935 d0375 answer d explanation a b c r

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 0.548845 -0.45116 The last column in the table contains the cummulative product of (1 + returns) B) C) D) Diff: 3 Topic: 10.3 Historical Returns of Stocks and Bonds Skill: Analytical Use the table for the question(s) below. Consider the following realized annual returns: S&P 500 Realized Return 23.6% 24.7% 30.5% 9.0% -2.0% -17.3% -24.3% 32.2% 4.4% 7.4% IBM Realized Return 46.3% 26.7% 86.9% 23.1% 0.2% -3.2% -27.0% 27.9% -5.1% -11.3% Year End 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 9) The variance of the returns on the S&P 500 from 1996 to 2005 is closest to: A) .0450 B) .3400 C) .1935 D) .0375 Answer: D Explanation: A) B) C) R + R2 + ... + RN R + R2 + ... + R10 D) 0.878 Rannual = 1 = 1 = = 8.8% 10 N 10 S&P 500 Realized Year End Return (R - R) 1996 23.6% 14.78% 1997 24.7% 15.88% 1998 30.5% 21.68% 1999 9.0% 0.18% 2000 -2.0% -10.82% 2001 -17.3% -26.12% 2002 -24.3% -33.12% 2003 32.2% 23.38% 2004 4.4% -4.42% 2005 7.4% -1.42% (R - R)2 0.0218448 0.0252174 0.0470022 3.24E-06 0.0117072 0.0682254 0.1096934 0.0546624 0.0019536 0.0002016 Variance = SUM of (R - R)2 / T - 1 = 0.3405116 / 9 = 0.0378346 Diff: 2 Topic: 10.3 Historical Returns of Stocks and Bonds Skill: Analytical WS1) Suppose that you want to use the 10 year historical average return on the S&P 500 to forecast the expected future return on the S&P 500. The 95% confidence interval fo...
View Full Document

Ask a homework question - tutors are online