Using 5 years of historical daily stock returns, you have determined the standard deviation of the returns to be 1.3%. This means that the annual standard deviation of the returns (rounded
To the nearest tenth of a percent)is

Question

Quizplus · Accepted Answer

To convert the daily standard deviation to an annual standard deviation, we need to multiply it by the square root of the number of trading days in a year (assuming 252 trading days in a year). Therefore, the annual standard deviation is 1.3% x sqrt(252) = 20.8% rounded to the nearest tenth of a percent. The correct answer is C. To annualize the standard deviation, we need to multiply the daily standard deviation by the square root of the number of trading days in a year. Assuming 252 trading days per year, the annual standard deviation would be:

1.3% x sqrt(252) = 20.8%

Using 5 Years of Historical Daily Stock Returns, You Have