Reading 3 - Statistical Measures of Asset Returns

A company reports its past six years' earnings growth at 10%, 14%, 12%, 10%, –10%, and 12%. The company's average compound annual growth rate of earnings is closest to:

• 8.0%.

• 7.7%.

• 8.5%.

Cameron Ryan wants to make an offer on the condominium he is renting. He takes a sample of prices of condominiums in his development that closed in the last five months. Sample prices are as follows (amounts are in thousands of dollars): $125, $175, $150, $155 and $135. The sample standard deviation is closest to:

• 370.00.

• 19.24.

• 38.47.

• X.

• Z.

• Y.

An analyst takes a sample of yearly returns of aggressive growth funds resulting in the following data set: 25, 15, 35, 45, and 55. The mean absolute deviation (MAD) of the data set is closest to:

• 16.

• 12.

• 20.

• 12.86%greater than

• 4.96%greater than

• 4.96% less than

What is the compound annual growth rate for stock A which has annual returns of 5.60%, 22.67%, and -5.23%?

• 7.08%.

• 6.00%.

• 8.72%.

A portfolio is equally invested in Stock A, with an expected return of 6%, and Stock B, with an expected return of 10%, and a risk-free asset with a return of 5%. The expected return on the portfolio is:

• 7.0%.

• 7.4%.

• 8.0%.

Consider the following set of stock returns: 12%, 23%, 27%, 10%, 7%, 20%,15%. The third quartile is:

• 20.0%.

• 21.5%.

• 23%.

A portfolio's monthly returns follow a distribution with a kurtosis measure of 4.2. Relative to a portfolio with normally distributed returns, this portfolio has a:

• higher probability of extreme upside returns and higher chance of extreme downside returns.

• lower probability of extreme upside returns and higher chance of extreme downside returns.

• higher probability of extreme upside returns and lower chance of extreme downside returns.

• 5.7.

• 7.2.

• 8.0.