Find the standard deviation for a security that has three one-year returns of -5%, 15%, and...

Question

Question

Find the standard deviation for a security that has three one-year returns of -5%, 15%, and 20%.

business finance

Answer 1

Answer #1

Average return=Total return/Total time period

=(-5+15+20)/3=10%

Standard deviation=[Total (Return-Average return)^2/(Time period-1)]^(1/2)

=[350/(3-1)]^(1/2)

=[350/2]^(1/2)

=13.23%(Approx).

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Answer 2

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