Question

1- What are your thoughts on why means and standard deviations of returns are often connected to expected returns and risk in returns? Write 50 words

2- Why use the mean and standard deviation? Why not other indicators? Write 50 words

3- How often do you use basic statistical tools, e.g. means, standard deviations, or others, in your personal or professional activities? Write 50 words

4- What tools do you use, and for what purposes do you use them? Write 50 words

Please write in own words. Please write appropriate words. Thank You!

Answer 1

1. Standard Deviation and Expected returns are measures to evaluate how much a portfolio can generate. Expected return is connected to the rate of return, because this is how the probability of distribution of investment will occur to the investors. Standard deviation considers how much can a probability of that a stock can deviate from one type of a return to another type of the investment return. (69 words)

2. We use Standard deviation to judge the actual stock performance and the portfolio manager’s risk investing style. Standard deviation measures the beta which measures the stock’s volatility. And the spread of mean returns over a graph plot could make an investor how large can the price range can be. These tools are convenient to measure the volatility, risk and actualized stock returns and other tools cannot be that efficient.(70 Words)

3.We use Standard deviation and mean tools in our life like in Marketing Manager's survey, we get client preferences as submitted answers, and we’d pick one set of preference type and consider it as a set of data. When we average it, we’d call it as a Mean. When we perform a Standard Deviation calculation, we’d get how much is the range that the spread could be, whether if it’s low, high or medium. (75 Words)

4. We use Standard Deviation and Means by using computing tools and software like R, SPSS tools. Means and Standard Deviations are averaging the returns and deviations and they reflect the expected rate of return and risk in a way as how much can a portfolio accumulate the growth or how much beta can a portfolio have. (59 Words)