Question

You have the following historical annual total returns on Terlingua Oil & Gas Exploration:

Year	Annual total return (%)
2001	0%
2002	-10%
2003	19%
2004	12%
2005	13%
2006	9%
2007	-4%
2008	5%
2009	2%
2010	4%

Calculate the sample standard deviation of annual return.

Answer 1

Calculating the Sample Standard Deviation of annual Return:-

Year	Stock (R) (%)	[(R)-E(R)]	[(R)-E(R)]^2
2001	0.00	-5.0000	25.00
2002	-10.00	-15.0000	225.00
2003	19.00	14.0000	196.00
2004	12.00	7.0000	49.00
2005	13.00	8.0000	64.00
2006	9.00	4.0000	16.00
2007	-4.00	-9.0000	81.00
2008	5.00	0.0000	0.00
2009	2.00	-3.0000	9.00
2010	4.00	-1.0000	1.00
	50.00		666.00

- Expected Annual Return, [E(R)]

= 5%

- Sample Standard Deviation

= 8.60%

So, the sample standard deviation of annual return is 8.60%

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