In: Finance
returns of 6 percent, 14 percent, 13 percent, 9 percent, and -4 percent for the past five years, respectively. What is the standard deviation of these returns
=> Formula to calculate standard deviation is:
,where x is the return, is the average of returns and n is the number of observations.
=> Average of returns () =
Therefore, = 7.6%
Here Deviation is (x - ) , Deviations squared is and variance is
=> Therefore, Standard deviation of the returns = 0.0723 or 7.23 %
=> Formula used: