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Question of the Week - Standard Deviation
The percentage returns for a stock for a 5-year period are provided below:
2008 12%
2009 9%
2010 -2%
2011 12%
2012 8%
What is the standard deviation of the stock returns?
Question of the Week - Standard Deviation 40 votes
26.56%
2 votes
0 ·
Comments
MEAN
7.80%
Correct Answer: A
Mean return = [12% + 9% -2% + 12% + 8%]/5 = 7.8%
Variance of returns = [(12-7.8)^2 + (9-7.8)^2 + (-2-7.8)^2 + (12-7.8)^2 + (8-7.8)2]/5 = 26.56
Standard deviation is the square root of variance = (26.56)^0.5 = 5.15%
Hope they don't try to confuse us like this in the exam.