Standard Deviation Compute the standard deviation of the five monthly returns for PG&E: 1.25 percent, -1.50 percent, 4.25 percent, 3.75 percent, and 1.98 percent
A) 1.876%
B) 1.946%
C) 2.046%
D) 2.287%

Question

Quizplus · Accepted Answer

To compute the standard deviation, we first find the mean of the returns:

(1.25 - 1.5 + 4.25 + 3.75 + 1.98) / 5 = 2.346%

Then we subtract the mean from each return, square the differences, and find the average of the squares:

[(1.25 - 2.346)^2 + (-1.5 - 2.346)^2 + (4.25 - 2.346)^2 + (3.75 - 2.346)^2 + (1.98 - 2.346)^2] / 5 = 7.071%

Finally, we take the square root of the average:

sqrt(7.071%) = 2.287%

Therefore, the answer is choice D.

Standard Deviation Compute the Standard Deviation of the Five Monthly