Compute the standard deviation of Kohl's monthly returns. The past five monthly returns for Kohl's are 5.55 percent, 8.62 percent, -4.44 percent, -1.52 percent, and 9.75 percent.
A) 4.92%
B) 5.07%
C) 6.28%
D) 6.12%

Question

Quizplus · Accepted Answer

To compute the standard deviation of Kohl's monthly returns, we can use the following formula:

Standard deviation = SQRT [ Σ( Xi - X )^2 / n ]

where Xi is each monthly return, X is the average monthly return, and n is the number of monthly returns.

First, we need to compute the average monthly return:

average monthly return = (5.55 + 8.62 - 4.44 - 1.52 + 9.75) / 5 = 3.19%

Next, we can compute the standard deviation using the formula above:

Standard deviation = SQRT [ ((5.55 - 3.19)^2 + (8.62 - 3.19)^2 + (-4.44 - 3.19)^2 + (-1.52 - 3.19)^2 + (9.75 - 3.19)^2) / 5 ] = 6.28%

Therefore, the best choice is C) 6.28%.

Compute the Standard Deviation of Kohl's Monthly Returns