# Over the past five years teen clothing stock produced

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Chapter 4 / Exercise 4.8
Statistics for Management and Economics + XLSTAT Bind-in
Keller
Expert Verified
67. Over the past five years, Teen Clothing stock produced returns of 18.7, 5.8, 7.9, 10.8, and 11.6 percent, respectively. For the same five years, the risk-free rate 5.2, 3.4, 2.8, 3.4, and 3.9 percent, respectively. What is the arithmetic average risk premium on Teen Clothing stock for this time period? A. 6.89 percentB. 7.01 percentC.7.22 percentD. 7.34 percentE. 7.57 percentAverage risk premium = [(.187 - .052) + (.058 - .034) + (.079 - .028) + (.108 - .034) + (.116 - .039)] / 5 = 7.22 percent
LEVEL OF DIFFICULTY: CORELearning Objective: 1-3SECTION: 1.3TOPIC: AVERAGE RISK PREMIUM1-26
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Chapter 4 / Exercise 4.8
Statistics for Management and Economics + XLSTAT Bind-in
Keller
Expert Verified
Chapter 001 A Brief History of Risk and Return68. Over the past ten years, large-company stocks have returned an average of 11.8 percent annually, long-term corporate bonds have earned 6.4 percent, and U.S. Treasury bills have returned 3.7 percent. How much additional risk premium would you have earned if you had invested in large-company stocks rather than long-term corporate bonds over those ten years?
LEVEL OF DIFFICULTY: CORELearning Objective: 1-3SECTION: 1.3TOPIC: RISK PREMIUM69. An asset had annual returns of 12, 18, 6, -9, and 5 percent, respectively, for the last five years. What is the variance of these returns?
LEVEL OF DIFFICULTY: CORELearning Objective: 1-3SECTION: 1.4TOPIC: VARIANCE1-27
Chapter 001 A Brief History of Risk and Return70. Over the past five years, Northern Railway stock had annual returns of 11, 13, -4, 7, and 18 percent, respectively. What is the variance of these returns?
LEVEL OF DIFFICULTY: CORELearning Objective: 1-3SECTION: 1.4TOPIC: VARIANCE71. An asset had returns of 6.8, 5.4, 3.6,-4.2, and -1.3 percent, respectively, over the past five years. What is the variance of these returns? A. .00173B. .00184C..00216D. .00240E. .00259Mean = (.068 + .054 + .036 - .042 - .013) / 5 = .0206Var = [(.068 - .0206)2+ (.054 - .0206)2+ (.036 - .0206)2+ (-.042 - .0206)2+ (-.013 - .0206)2] / (5 - 1) = .00216
LEVEL OF DIFFICULTY: CORELearning Objective: 1-3SECTION: 1.4TOPIC: VARIANCE1-28
Chapter 001 A Brief History of Risk and Return72. An asset had annual returns of 15, 12, -18, 2, and 37 percent, respectively, for the past five years. What is the standard deviation of these returns?
LEVEL OF DIFFICULTY: CORELearning Objective: 1-3SECTION: 1.4TOPIC: STANDARD DEVIATION