You have been following a stock for 3 months and the following is its past return...

You have been following a stock for 3 months and the following is its past return

Year 1: 7%

Year 2: 13%

Year 3: -3%

What is the standard deviation of the stock based on the historical data? (Put the answer in decimal points instead of percentage)

Expert Solution

Statement showing Standard deviation

Year	Return (x) (in %)	(x-u)	(x-u)^2
1	7	1.33	1.77
2	13	7.33	53.73
3	-3	-8.67	75.17
	17		130.67

Mean = u = 17/3 = 5.67

Standard devaition = [130.67/3]^0.5

= 43.56^0.5

= 6.60

Thus ans = 0.066

jeff jeffy answered 3 years ago

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