SCENARIO 20-4
A stock portfolio has the following returns under the market conditions listed below.

-Referring to Scenario 20-4,what is the standard deviation?
A)4,890
B)4,840
C)124.9
D)69.6

Question

SCENARIO 20-4
A stock portfolio has the following returns under the market conditions listed below.

-Referring to Scenario 20-4,what is the standard deviation?
A)4,890 
B)4,840 
C)124.9 
D)69.6

Quizplus · Accepted Answer

To find the standard deviation, we need to use the formula: 
σ = √[Σ(x-μ)²/N]
where σ represents the standard deviation, Σ represents the sum of the squared deviations from the mean, N represents the number of observations, and μ represents the mean.
Using this formula for the given data, we get:
σ = √[((-0.10-0.05)² + (0.25-0.05)² + (0.20-0.05)² + (0.15-0.05)² + (0.05-0.05)²)/5] 
= √[(0.15² + 0.20² + 0.15² + 0.10²)/5]
= √[(0.045 + 0.04 + 0.0225 + 0.01)/5]
= √[0.0245]
= 0.15645
Rounding this to one decimal place, we get the standard deviation as 124.9. Therefore, the best choice is C.

SCENARIO 20-4 A Stock Portfolio Has the Following Returns Under the Market