Question

If the volatility for a portfolio is 20% per year, what is the volatility per quarter? Group of answer choices 5% 2% 10% 20%

Answer 1

Well,

In order to find the volatility of the portfolio ,

We should know that,

For getting the quarter volatility,

Formula = annulaized volatility ÷ root of 4

Annulaized volatility = 20%

No of quarters in a year = 4

Root of 4 because quarters are 4 times in a year, however if we want to know the monthly rate of volatility we should have taken root of 12 because there are 12 months in a year.

So, by applying it

We get, = 20% ÷ root of 4

= .20 ÷ 2 ( root of 4)

= 0.1  

In percentage, .1 ×100 = 10%

Therefore, the answer is 10%