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 percent
B)5.07 percent
C)6.28 percent
D)6.12 percent

Question

Quizplus · Accepted Answer

Using the formula for standard deviation of a sample, we get:

s = sqrt[((5.55 - 7.97)^2 + (8.62 - 7.97)^2 + (4.44 - 7.97)^2 + (1.52 - 7.97)^2 + (9.75 - 7.97)^2) / (5-1)]

s = sqrt[(5.5376 + 0.4524 + 11.1009 + 39.9504 + 2.7009) / 4]

s = sqrt[59.7422 / 4]

s = sqrt[14.9356]

s = 3.863

Therefore, the standard deviation is approximately 6.28 percent, which corresponds to choice C.

Compute the Standard Deviation of Kohl's Monthly Returns