Find the variance for a security that has three one-year returns of 5%, 10%, and 15%
A) 10.00%
B) 16.67%
C) 25.00%
D) 30.00%
Answer: C
Explanation: C) Average return = Σrt/n = (5% + 10% + 15%)/3 = 10%
Variance(r) = Σ (ri - average)2 / (n - 1)
= Σ[(5% - 10%)2 + (10% - 10%)2 + (15% - 10%)2]/(3 - 1) = 25%
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