Given that a stock has generated returns of 6%, 18%, -5% and 20% over the last four years, the standard deviation of stock returns was:
A) 9.03%.
B) 10.50%.
C) 11.62%.
D) 12.46%.

Question

Quizplus · Accepted Answer

The standard deviation of the stock returns can be calculated using the formula for standard deviation, which involves finding the mean (average) return, subtracting each year's return from the mean, squaring those results, finding the average of those squared differences, and then taking the square root of that average. The returns are 6%, 18%, -5%, and 20%. The mean return is (6 + 18 - 5 + 20) / 4 = 9.75%. The squared differences from the mean are (6 - 9.75)^2, (18 - 9.75)^2, (-5 - 9.75)^2, and (20 - 9.75)^2. The average of these squared differences is calculated, and then the square root of that average gives the standard deviation, which is approximately 11.62%.

Given That a Stock Has Generated Returns of 6%, 18