A stock produced returns of 19 percent,27 percent,and -38 percent over three of the past four years,respectively.The arithmetic average for the past four years is 7 percent.What is the standard deviation of the stock's returns for the four-year period?

Question

Quizplus · Accepted Answer

Average return = 0.07 = (0.19 + 0.27 - 0.38 + x)/4x = 0.20σ² = [(0.19 - 0.07)² + (0.27 - 0.07)² + (-0.38 - 0.07)² + (0.20 - 0.07)²]/(4 - 1) = 0.091267σ = √0.091267 = 30.21 percent

A Stock Produced Returns of 19 Percent,27 Percent,and -38 Percent