Use the Information Below for the Following Problem(S)
The annual rates of return of Stock Z for the last four years are 0.10, 0.15, -0.05, and 0.20, respectively.
-Refer to Exhibit 1.10.Compute the standard deviation of the annual rate of return for Stock Z.
A) 0.0070
B) 0.0088
C) 0.0837
D) 0.0935
E) 0.1145

Question

Quizplus · Accepted Answer

$$\begin{aligned}
\text { Std Dev } & = \sqrt { \frac { ( 0.10 - 0.10 ) ^ { 2 } + ( 0.15 - 0.10 ) ^ { 2 } + ( - 0.05 - 0.10 ) ^ { 2 } + ( 0.20 - 0.10 ) ^ { 2 } } { 4 } } \
& = \sqrt { \frac { 0 + .0025 + .0225 + .01 } { 4 } } = \sqrt { \frac { .035 } { 4 } } = .0935
\end{aligned}$$