Question

The standard deviation on the rate of return on an investment is a measure of its volatility, or risk.
What would a standard deviation of zero mean?
What would a standard deviation of 10 percent mean?

Answer 1

Answer to "What would a standard deviation of zero mean?"

When the share's standard deviation is zero means it don't react to the market fluctuation i.e it won't deviate from the current price of shares whether the market will rise or fall. For Example, means return over the course of five years: %, 5%, 10%, 15%, and 5%. The mean value, is 8.75 %. The standard deviation is 4.15%. now, in this case, each individual yearly value is an average of 4.15% away from the mean. But if share's standard deviation is zero it won't move away from the mean.

Answer to "What would a standard deviation of 10 per cent mean?"

Now if the share's standard deviation is 10% then the share will move up and down with the rise and fall of market index with a deviation of 10%, suppose if market does down by 5% from its mean, then the share will go down by 10%.