An asset had returns of 14%, 26%, - 13%, 8%, and 12% over the past five years. What was the variance of the returns?
A) .01287
B) .01614
C) .02018
D) .02632
E) .03512

Question

Quizplus · Accepted Answer

To calculate the variance, first find the mean of the returns: (14% + 26% - 13% + 8% + 12%) / 5 = 9.4%. Then, find the squared deviations from the mean for each return, average these squared deviations, and convert to decimal form: [(14-9.4)^2 + (26-9.4)^2 + (-13-9.4)^2 + (8-9.4)^2 + (12-9.4)^2] / 5 = 0.02018.

An Asset Had Returns of 14%, 26%, - 13%, 8