A stock price is $20.It has an expected return of 12% and a volatility of 25%.What is the standard deviation of the change in the price in one day.(For this question assume that there are 365 days in the year.)
A) $0.20
B) $0.23
C) $0.26
D) $0.29

Question

Quizplus · Accepted Answer

The standard deviation of the change in the price in one day is equal to the volatility divided by the square root of the number of days in the year. Therefore, the standard deviation is equal to 0.25 / sqrt(365) = $0.26.

A Stock Price Is $20