If there is a 20% chance we will get a 16% return,a 30% chance of getting a 14% return,a 40% chance of getting a 12% return,and a 10% chance of getting an 8% return,what would be the standard deviation?
A)2.24
B)2.56
C)2.83
D)2.98

Question

Quizplus · Accepted Answer

To find the standard deviation, first calculate the expected return: (0.20*16) + (0.30*14) + (0.40*12) + (0.10*8) = 12.8%. Then, calculate the variance: (0.20*(16-12.8)^2) + (0.30*(14-12.8)^2) + (0.40*(12-12.8)^2) + (0.10*(8-12.8)^2) = 5.02. The standard deviation is the square root of the variance, √5.02 ≈ 2.24.

If There Is a 20% Chance We Will Get a 16