Question

Question 22

You find a certain stock that had returns of 14 percent, -15 percent, 20 percent, and -12 percent for four of the last five years. The average return of the stock over this period was 6.5 percent. What is the standard deviation of the stock's returns?

Group of answer choices

15.3 percent

16.8 percent

18.7 percent

19.3 percent

20.3 percent

Answer 1

Ans 18.7 percent

YEAR	RETURN	(X -Average Return of X)^2
1	14	56.250000
2	-15	462.250000
3	20	182.250000
4	-12	342.250000
5	25.5	361.000000
Total	32.5	1404.000000
5th year return =	Expected return * 5 - Sum of other returns
	6.5 * 5 - (14 - 15 + 20 - 12)
	25.5
Expected Return =	Total Return / NO of years
	32.5 / 5
	6.50
Variance =	sum of (X -Average Return of X)^2 / (no of years -1)
	1404 / 4
	351.0000
Standard Deviation =	Square root of Variance
	Square root of 351
	18.7