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stranahan stranahan
wrote...
Posts: 3324
5 years ago
Stocks A, B, C, and D have returns of 5%, 15%, 30%, and 110%, respectively. What is their standard deviation?
A) 32.05%
B) 47.78%
C) 64.25%
D) 56.75%
Textbook 

Financial Management: Core Concepts


Edition: 2nd
Author:
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ExpertXExpertX
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Posts: 249
5 years ago
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B -- Mean return = (5% + 15% + 30% + 110%)/4 = 40%, so variance = [(5% - 40%) to power of ((2)) + (15% - 40%) to power of ((2)) + (30% - 40%) to power of ((2)) + (110% - 40%) to power of ((2))]/(4 -1 ) = 2,283.33%. So, standard deviation = the square root of the variance = 47.78%
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