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A stock you are looking at has generated the following annual returns: 11.8%, -8.6% and 5.8%....

A stock you are looking at has generated the following annual returns: 11.8%, -8.6% and 5.8%. What was the standard deviation of its returns? Answer in percent, rounded to two decimal places (e.g., 4.32% = 4.32).

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Answer #1

Mean = (0.118 - 0.086 + 0.058) / 3

Mean = 0.03 or 3%

Standard deviation = {[(0.118 - 0.03)2 + (-0.086 - 0.03)2 + (0.058 - 0.03)2] / 3 - 1}1/2

Standard deviation = {[0.007744 + 0.013456 + 0.000784] / 2}1/2

Standard deviation = {0.010992}1/2

Standard deviation = 0.1048 or 10.48%

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