Question

Suppose the past four years, the returns of your portfolio were 10%, 5%, -6% and 12%....

Suppose the past four years, the returns of your portfolio were 10%, 5%, -6% and 12%. What was the standard deviation of the returns of your portfolio?

Select one:

a. 5.25%

b. 5.50%

c. 6.00%

d. 8.06%

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Homework Answers

Answer #1

Ans d. 8.06%

YEAR RETURN (X -Average Return of X)^2
1 10 22.562500
2 5 0.062500
3 -6 126.562500
4 12 45.562500
Total 21 194.750000
arithmetic mean = Total Return / NO of years
21 / 4
5.250
Variance = sum of (X -Average Return of X)^2 / ( no of years - 1)
194.75 / (4 - 1)
64.9167
Standard Deviation = Square root of Variance
Square root of 64.9167
8.06
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