Stocks A, B, C, and D have returns of 5%, 15%, 30%, and 110%, respectively. What is their standard deviation?
A) 64.25%
B) 56.75%
C) 47.78%
D) 32.05%
Answer: C
Explanation: C) Mean return = (5% + 15% + 30% + 110%)/4 = 40%, so
variance = [(5% - 40%)2 + (15% - 40%)2 + (30% - 40%)2 + (110% - 40%)2]/(4 -1 )
= 2,283.33%. So, standard deviation = the square root of the variance = 47.78%.
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