Year Stock X 1 8.00% 2 -6.00% 3 13.00% 4 10.00% What is the standard deviation...

Year	Stock X
1	8.00%
2	-6.00%
3	13.00%
4	10.00%

What is the standard deviation of Stock X's returns?

Year	Stock X	Stock Y
1	13.00%	-7.00%
2	-7.00%	17.00%
3	17.00%	6.00%
4	10.00%	9.00%

What is the standard deviation of the returns of Stock X?

Note: please post your excel formulas for these problems as well.

Solutions

Expert Solution

You need to use Financial calculator to solve this problem. You can download it.

Standard Deviation is the deviation of the returns around Mean returns

1st answer:

Calculator strokes:

2nd + Data => XO1 = 8%, (Down Arrow Key in calculator), XO2 = -6%, (Down Arrow Key in calculator), XO3 = 13%, (Down Arrow Key in calculator), XO4 = 10% {So here you are entering all the values of returns in the calculator, now calculator will find the mean and standard deviation)

2nd + Stat => 2.5860 (press down arrow key for 4 times)

So the Standard Deviation of return is 2.5860.

2nd Answer:

Just change the value of Xs.

Calculator Strokes:

2nd + Data => XO1 = 13%, (Down Arrow Key in calculator), XO2 = -7%, (Down Arrow Key in calculator), XO3 = 17%, (Down Arrow Key in calculator), XO4 = 10% {So here you are entering all the values of returns in the calculator, now calculator will find the mean and standard deviation)

2nd + Stat => 9.14 (press down arrow key for 4 times)

So the Standard Deviation of return is 9.14.

jeff jeffy answered 1 year ago

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