The standard deviation of the past five monthly returns for PG Company are 2.75 percent, -0.75 percent, 4.15 percent, 6.29 percent, and 3.84 percent. What is the standard deviation?
A)2.309 percent
B)2.581 percent
C)3.256 percent
D)3.406 percent

Question

Quizplus · Accepted Answer

The formula for standard deviation is the square root of the variance, which is the sum of the squared deviations from the mean divided by the number of observations minus 1. 
Using the given data, we can find the variance as follows: 
Variance = [(2.75-4.45)^2 + (1.45)^2 + (3.54)^2 + (0.09)^2 + (1.61)^2] / (5-1) 
Variance = 26.6725 / 4 
Variance = 6.668125 
Taking the square root of the variance gives us the standard deviation: 
Standard deviation = sqrt(6.668125) 
Standard deviation = 2.581 
Therefore, the best choice is B, 2.581 percent.

The Standard Deviation of the Past Five Monthly Returns for PG