What is the approximate standard deviation of returns for a one-year project that is equally likely to return 100 percent as it is to provide a 100 percent loss?
A)0 percent
B)50 percent
C)71 percent
D)100 percent Mean = (.5 x 100%) + (.5 x-100)
= 50-50
= 0%
Variance =

Question

Quizplus · Accepted Answer

The standard deviation is calculated as the square root of the variance. Since the returns are equally likely to be +100% or -100%, the variance is 100^2 = 10,000, and the standard deviation is the square root of 10,000, which is 100%.

What Is the Approximate Standard Deviation of Returns for a One-Year