Downtown Industries’ common stock had returns of 5.2, 10.3, 9.3, and 9.5 percent, respectively, over the past four years. What is the standard deviation of these returns?
Downtown Industries’ common stock had returns of 5.2, 10.3, 9.3, and 9.5 percent, respectively, over the past four years. What is the standard deviation of these returns?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Downtown Industries’ common stock had returns of 5.2, 10.3, 9.3, and 9.5 percent, respectively, over the past four years. What is the standard deviation of these returns?
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Step 1: Overview
VIEWStep 2: Calculate the mean (average) of the returns
VIEWStep 3: Calculate the squared difference between each return and the mean
VIEWStep 4: Calculate the average of the squared differences
VIEWStep 5: Take the square root of the result from step 3 to find the standard deviation
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