Question

Please solve and show your work

Question 5 5 pts Over the past six years, a stock had annual returns of 2 percent, -5 percent, 6 percent, 3 percent, 3 percent, and -2 percent, respectively. What is the standard deviation of these returns? 3.61 percent 3.97 percent 3.88 percent 3.33 percent O 3.29 percent

Answer 1

From the given data, standard deviation is calculated as follow:

year	x	(x-u)	(x-u)^2
1	2%	0.008333333	0.000069444
2	-5%	-0.061666667	0.003802778
3	6%	0.048333333	0.002336111
4	3%	0.018333333	0.000336111
5	3%	0.018333333	0.000336111
6	-2%	-0.031666667	0.001002778
u	0.011666667	sum	0.007883333

so standard deviation =
Σ( – u)? /η
= $\sqrt{\0.007883333/6}$ = 0.0361 or 3.61%

So, standard deviation of this stock is 3.61%