Given the following table, calculate the standard deviation of returns for Vegeta Incorporated. Select the range that includes the correct answer.

Expert Solution

The option (1) is the right option.

Explanation:

Year	return	return-average return	square of (return-average return)
2017	10%	6.25%	0.39062500%
2018	25%	21.25%	4.51562500%
2019	-15%	-18.75%	3.51562500%
2020	-5%	-8.75%	0.76562500%
average return = (10+25-15-5)/4	3.75%
sum of (square of (return-average return)			9.19%
variance = sum of (square of (return-average return)	9.19%/4		0.022975
standard deviation = square root of variance			15.16%
Option is (1)	standard deviation is less than or equal to 16%

The correct answer is (1).

Junaid answered 2 years ago

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