In-line exercise: mean return and volatility, solution (1)
In four years, a portfolio of common stocks realized returns of 40%, 0%, -30%, and 10%. Compute the (arithmetic) mean, variance, and standard deviation of returns. For this exercise, divide by the number of returns (not one less) to compute the variance.
Phil Dybvig
| The mean is one-fourth of the sum of the four returns. | |
|
Press the small right triangle for more of the answer. I recommend trying to solve the rest of the problem first if you have not already done so. |