An asset had returns of 14%, 26%, - 13%, 8%, and 12% over the past five years. What was the standard deviation of the returns?
A) 11.34%
B) 12.70%
C) 14.21%
D) 16.22%
E) 18.74%

Question

Quizplus · Accepted Answer

1. Calculate the average return: (14% + 26% - 13% + 8% + 12%) ÷ 5 = 9.4%
2. Calculate each deviation of returns from the average: 
-14.4%, 16.6%, -22.4%, -1.4%, 2.6%
3. Square each deviation: 207.36, 275.56, 501.76, 1.96, 6.76
4. Sum the squares of deviations: 993.4
5. Divide the sum by n-1 (n=5): 993.4 ÷ 4 = 248.35
6. Take the square root of the result: √248.35 = 14.21%
Therefore, the standard deviation of the returns is 14.21%.

An Asset Had Returns of 14%, 26%, - 13%, 8