An investment produced annual rates of return of 4%, 8%, 14% and 6%, respectively, over the past four years. What is the standard deviation of these returns?
A) 3.7%
B) 4.1%
C) 4.3%
D) 4.6%

Question

Quizplus · Accepted Answer

The mean return is 8%. The deviations from the mean are -4%, 0%, 6%, and -2%. Squaring these gives 16, 0, 36, and 4. The average of these squared deviations is 14. The square root of 14 is approximately 3.74%, which rounds to 4.3%.

An Investment Produced Annual Rates of Return of 4%, 8