Question

Consider the following returns: Year-End 2000 2001 2002 2003 2004 2005 Lowes Realized Return 20.4% 72.7% - 25.7% 56.3% 6.7% 1
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Answer #1

Volatility is also called as Standard deviation. It is a measure of risk.

We can calculate volatility in excel,

Yr Return
2000 -14.60%
2001 4.10%
2002 -58.10%
2003 71.90%
2004 17.30%
2005 0.90%
Standard deviation 42%
(=STDEV.S(returns))

Hence the volatility of Home depot's return is 42%.

An upvote would be appreciated.

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