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
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 |
Get Answers For Free
Most questions answered within 1 hours.