You believe Orange, Inc. stock has a 20% chance of making 11%, a 30% chance of making 16% and a 50% chance of losing 6%. What is the standard deviation of Orange, Inc. stock return?
Given about Orange Inc, its probability and expected return.
Values are solved in the table below:
Standard deviation = sqrt(Σ[(r^2)*p] - [Σ(r*p)]^2)
So, standard deviation = SQRT(0.0119 - 0.04^2) = SQRT(0.0103) = 10.15%
So, standard deviation of Orange, Inc. stock return is 10.15%
Option B is correct.
Get Answers For Free
Most questions answered within 1 hours.