# Variance question

For the past three years, Acme Corp. has generated the following sample returns on equity (ROE): 4%, 10%, and 1%. What is the sample variance of the ROE over the last three years? A) 21.0%. B) 4.6%. C) 21.0(%2). Your answer: A was incorrect. The correct answer was C) 21.0(%2). [(4 − 5)2 + (10 − 5)2 + (1 − 5)2] / (3 − 1) = 21(%2). I haven’t really had any trouble with sample variance on the Ti up to now,could anybody clarify the notation for me please?

Well for this question there is no calculation required- variance is always in squared units. Otherwise you’d find the mean, then subtract the mean from the three variances, square those numbers, add then, and then divide them by n-1. Or: mean= 4 + 1 + 1 = 15/3 = 5 4 - 5 = -1 10 - 5 = 5 1 - 5 = -4 -1^1 = 1 5^2 = 25 -4 ^2 = 16 1 + 25 + 16 = 42 42/ (3-1) = 21%^2

I dont know if my computer is misreading the notation, but i got 21%, so I dont know why A would be wrong. C shows as 21.0(%2) which I dont understand.

Biz,as you can see from my first post…working out 21% wasn’t a problem…I found sample sd on the Ti and obviously squared it…I thought the (%2) after 21 was a trick answer,hence my question.

Variance is in squared units. I’m not sure what the notation is on your calculator, but that may the cause of it…

I did it on paper. I dont keep my calc in the office. This one seems pretty easy.

Guys, I thin k the answer is 14 (percent square)… Mean = 5 variance = {(4-5)^2 + (10-5)^2 + (1-5)^2 }/ (3) = 42/3 = 14 Why have u divided it by 2 i.e. 3-1…

Oops its sample variance… so it is n-1…got it…