Question

In: Finance

returns of 6 percent, 14 percent, 13 percent, 9 percent, and -4 percent for the past...

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

Solutions

Expert Solution

=> 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:


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