The return on your portfolio over the last 5 years were -5%, 20%, 0%, 10% and 5%. What was the standard deviation of your return? What is your best guess as to next year's return?
A) 2.74%; 6.00%.
B) 5.31%; 5.65%.
C) 9.62%; 6.00%.
D) 9.62%; 15.00%.
E) 12.70%; 20.00%.

Question

Quizplus · Accepted Answer

The standard deviation of the returns is calculated as 9.62%. The best guess for next year's return, assuming no other information, is the average of past returns, which is 6.00%.

The Return on Your Portfolio Over the Last 5 Years