Question

High Growth’s annual stock returns over the last 7 years are: 27%, –18%, 34%, 11%, –28%, 75%, and –35%. What is High Growth’s standard deviation of return? Enter your answer rounded to two decimal places. Do not enter % in the answer box. For example, if your answer is 0.12345 or 12.345% then enter as 12.35 in the answer box.

Answer 1

Where,

R is the return each year

N is the no. of years.

No. of years	Return (in %)	( Return - Mean return)	( Return - Mean return)2
1	27	17.57	308.7049
2	-18	-27.43	752.4049
3	34	24.57	603.6849
4	11	1.57	2.4649
5	-28	-37.43	1401.005
6	75	65.57	4299.425
7	-35	-44.43	1974.025
Total return	66		sum =9341.714
Mean 66 / 7 =	9.43 (approx)

Mean return = Total of all year returns / No. of years

= 66 / 7 = 9.43 %

(as computed in the above table)

=

=36.53% (approx)

Standard deviation of returns = 36.53

Hope it helps!