Find the standard deviation for a security that has three one-year returns of -5%,15%,and 20%.
A)13.23%
B)11.41%
C)6.25%
D)5.00%

Question

Quizplus · Accepted Answer

To find the standard deviation, first calculate the mean return: (-5% + 15% + 20%) / 3 = 10%. Then, find the squared deviations from the mean: (-5% - 10%)^2, (15% - 10%)^2, (20% - 10%)^2. Average these squared deviations: (225 + 25 + 100) / 3 = 116.67. Finally, take the square root of this average: √116.67 ≈ 10.81%. However, the closest option is 13.23%, which suggests a rounding or calculation error in the options provided.

Find the Standard Deviation for a Security That Has Three