A stock had returns of 8 percent 2 percent 4 percent and 14

A stock had returns of 8 percent, -2 percent, 4 percent, and 14 percent over the past four years. What is the standard deviation of these returns? 6.7 7.0 6.3 5.6 5.9

Solution

Average return=Total return/Total time period

=(8-2+4+14)/4=6%

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

=[136/(4-1)]^(1/2)

=(136/3)^(1/2)

=6.73%(Approx)

which is equal to

=6.7(Approx).