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High Growth’s annual stock returns over the last 7 years are: 27%, –18%, 34%, 11%, –28%,...

High Growth’s annual stock returns over the last 7 years are: 27%, –18%, 34%, 11%, –28%, 75%, and –15%. What is High Growth’s standard deviation of return? Enter your answer rounded to two decimal places. Do not enter % in the answer box. For example, if your answer is 0.12345 or 12.345% then enter as 12.35 in the answer box.

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Answer #1

SD = SQRT[ [ Sum [ (X - Avg X)^2 ] / n ]

Avg ret = Sum [ Ret ] / n

= [ 27%-18%+34%+11%-28%+75%-15% ] / 7

= 86% / 7

= 12.29%

Year Ret (X) ( X - Avg X) ( X - Avg X)^2
1     0.2700 0.1471     0.0216
2    -0.1800 -0.3029     0.0917
3     0.3400 0.2171     0.0471
4     0.1100 -0.0129     0.0002
5    -0.2800 -0.4029     0.1623
6     0.7500 0.6271     0.3933
7    -0.1500 -0.2729     0.0745
Sum [ (X - Avg X)^2 ]     0.7907
Sum [ (X - Avg X)^2 ] / n     0.1130
SQRT [ Sum [ (X - Avg X)^2 ] / n ]     0.3361

SD = 0.3361 i.e 33.61%

Answer is 33.61

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