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Over the last 4 years a stock produced returns of 14,9,-7, and 12 percent, respectively. What...

Over the last 4 years a stock produced returns of 14,9,-7, and 12 percent, respectively. What is the standard deviation of these returns?

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Answer #1

Returns for four years are 14%,9%,-7%, and 12% or

Time period =4 years
Mean=(14%+9%+(-7%)+12%)/4=0.07

Now, we need to subtract the mean for each number and then square the result.

=(14%-0.07)^2=0.0049
=(9%-0.07)^2=0.0004
=(-7%-0.07)^2=0.0196
=(12%-0.07)^2=0.0025

Now, we need to calculate the mean of the squared differences.

=(0.0049+0.0004+0.0196+0.0025)/4=0.0274/4=0.00685

To calculate the standard deviation, we need to take the square root of 0.00685
So, standard deviation =(0.00685)^(1/2)=0.082764727 or 8.28% (Rounded to two decimal places)

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