A stock produced returns of 16 percent,9 percent,and 21 percent over three of the past four years,respectively.The arithmetic average for the past four years is 10 percent.What is the standard deviation of the stock's returns for the four-year period?

Question

Quizplus · Accepted Answer

Average return = 0.10 = (0.16 + 0.09 + 0.21 + x)/4x = -0.06σ² = [(0.16 - 0.10)² + (0.09 - 0.10)² + (0.21 - 0.10)² + (-0.06 - 0.10)²]/(4 - 1) = 0.0138σ = √0.0138 = 11.75 percent

A Stock Produced Returns of 16 Percent,9 Percent,and 21 Percent