Consider the following historic set of returns for Healthclub Ltd stock: What is the standard deviation of the returns on Healthclub Ltd?
A)4.78%
B)9.23%
C)85.19%
D)18.30%

Question

Consider the following historic set of returns for Healthclub Ltd stock:  What is the standard deviation of the returns on Healthclub Ltd?
A)4.78% 
B)9.23% 
C)85.19% 
D)18.30%

Quizplus · Accepted Answer

To calculate the standard deviation of the returns on Healthclub Ltd, we can use the following formula: 
Standard deviation = square root of [(sum of (each return minus average return) squared) divided by (number of returns - 1)]

Using the provided set of returns, we can calculate the average return as follows: 
Average return = (10.3% + 12.8% + 8.6% - 6.1% - 1.2%) / 5 = 4.88%

Then, using this average return, we can calculate the standard deviation using the formula above: 
Standard deviation = square root of [((10.3% - 4.88%)^2 + (12.8% - 4.88%)^2 + (8.6% - 4.88%)^2 + (-6.1% - 4.88%)^2 + (-1.2% - 4.88%)^2) / (5 - 1)] = 9.23%

Therefore, the correct answer is B: 9.23%.

Consider the Following Historic Set of Returns for Healthclub Ltd