Math Problem Statement

Consider the following five monthly​ returns: 3​%, −1​, 2​%, 6​%, −4​% . Calculate the arithmetic average monthly return over this period and express your answer as a percentage per month.

b. Calculate the geometric average monthly return over this period.

c. Calculate the monthly variance over this period.

d. Calculate the monthly standard deviation over this period.

Solution

Ask a new question for Free

By Image

Drop file here or Click Here to upload

Math Problem Analysis

Mathematical Concepts

Arithmetic Mean
Geometric Mean
Variance
Standard Deviation
Financial Mathematics

Formulas

Arithmetic Average: Ra = (Σri) / n
Geometric Average: Rg = [(Π(1 + ri))^(1/n)] - 1
Variance: Variance = (Σ(ri - Ra)^2) / n
Standard Deviation: SD = √Variance

Theorems

Properties of Means
Concept of Variance and Standard Deviation

Suitable Grade Level

Undergraduate Finance/Statistics