Standard Deviation 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

To calculate the standard deviation, first find the mean of the five monthly returns:
(2.75 - 0.75 + 4.15 + 6.29 + 3.84) / 5 = 3.056%

Then, calculate the variance by finding the sum of the squared difference between each monthly return and the mean, divided by the number of monthly returns minus one:
((2.75 - 3.056)^2 + (-0.75 - 3.056)^2 + (4.15 - 3.056)^2 + (6.29 - 3.056)^2 + (3.84 - 3.056)^2) / 4 = 8.839%

Finally, take the square root of the variance to get the standard deviation:
sqrt(8.839%) = 2.581%

Therefore, the answer is B.

Standard Deviation the Standard Deviation of the Past Five Monthly