A mutual fund has five equally likely outcomes: -5%, 8%, 12%, 15%, and 20%. Calculate the variance of the rate of return. Round your answer to the nearest tenth of a percent.

Question

Quizplus · Accepted Answer

To calculate the variance, first find the mean: (−5% + 8% + 12% + 15% + 20%) / 5 = 10%. Then, calculate each outcome's squared deviation from the mean, average these squared deviations, and round to the nearest tenth: [(−5−10)² + (8−10)² + (12−10)² + (15−10)² + (20−10)²] / 5 = 71.6%.

A Mutual Fund Has Five Equally Likely Outcomes: -5%, 8