A Canadian common stock had the following rates of return in the past four years: 3%, 8%, 5% and-4%. The variance for the rate of return over this 4-year period is
A) 26
B) 42
C) 36
D) 32

Question

Quizplus · Accepted Answer

The variance is the average of the squared differences from the mean. The mean return is (3+8+5-4)/4 = 3%. The squared differences from the mean are (3-3)^2 = 0, (8-3)^2 = 25, (5-3)^2 = 4, and (-4-3)^2 = 49. The variance is (0+25+4+49)/4 = 26.

A Canadian Common Stock Had the Following Rates of Return