Question

a. Given the holding-period returns shown in the popup window, , compute the average returns and the standard deviations for the Zemin Corporation and for the market. b. If Zemin's beta is 1.61 and th

Answer 1

To calculate the average returns, add up all the holding-period returns and divide by the total number of returns. Use the formula sqrt(sum((return - average_return)^2) / (n-1)) to compute the standard deviation.

Step-by-step explanation:

To compute the average returns, add up all the holding-period returns and divide by the total number of returns. For Zemin Corporation, the average return can be calculated by adding up the holding-period returns and dividing by the total number of returns. For example, if the holding-period returns are 5%, 8%, and -2%, the average return would be (5% + 8% + -2%) / 3 = 3.67%. Similarly, you can calculate the average return for the market using the same method.

To compute the standard deviation, you can use the formula sqrt(sum((return - average_return)^2) / (n-1)), where return is the individual holding-period return, average_return is the calculated average return, and n is the total number of returns. This will give you the standard deviation for both Zemin Corporation and the market.