Question

Risk and return

You are considering an investment in the stock market and have identified three potential stocks, they are Crown (ASX: CWN), Tencent (HKG: 0700), and Commonwealth Bank (ASX: CBA). The historical prices for the past 10 years are shown in the table below. Assume no dividend is distributed during this period.

Year	Crown	Tencent	Commonwealth (CBA)
2010	7.76	29.04	53.63
2011	8.57	40.40	52.15
2012	8.09	37.94	50.39
2013	11.59	54.28	64.10
2014	16.68	108.70	73.83
2015	13.61	132	88.85
2016	12.27	144.90	78.67
2017	11.4	204.40	81.66
2018	13.25	463.60	78.87
2019	11.95	346	69.91

1. Calculate the standard deviation of the Crown, Tencent, and CBA.

Answer 1

S.D.= Square Root of Square of Deviations aroound Mean/No.of Observations

S.D. of Crown=21.97%

S.D. of Tencent= 45.73%

S.D. of Common Wealth Bank=13.17%

No. of observations=9