The average return for the Millennium Falcon Company Inc. stock is 13%. The variance and standard deviation can be calculated using the returns for each year. The covariance and correlation with the market index can also be calculated using the returns for each year.
To calculate the Millennium Falcon Company Inc.'s stock average return, we need to sum up the returns for each year and divide by the total number of years. In this case, the sum of the returns is 20% + 10% + (-10%) + 13% + 32% = 65%. Therefore, the average return is 65% / 5 years = 13% per year. To calculate variance, subtract the average return from each individual return, square the differences, and then sum them up. Divide the sum by the total number of years to get the variance. Standard deviation is the square root of variance. For the market index, the average return is 17% + 5% + (-7%) + 3% + 7% = 25% / 5 years = 5% per year. To calculate covariance, subtract the average return of the market index from the individual returns of the Millennium Falcon Company, multiply the differences, and then sum them up. Divide the sum by the total number of years to get the covariance. Correlation is the covariance divided by the product of the standard deviations of the stock and the market index.