A stock produced returns of 14 percent, 17percent, and -1 percent over three of the past four years, respectively. The arithmetic average for the past four years is 6 percent. What is the standard deviation of the stock's returns for the four-year period

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Question:

A stock produced returns of 14 percent, 17percent, and -1 percent over three of the past four years, respectively. The arithmetic average for the past four years is 6 percent. What is the standard deviation of the stock's returns for the four-year period

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Answer:11.23%Explanation:Arithmetic return = Total return/Total time period  6% = (14% + 17% - 1% + x%) / 4(6%*4) =30% + x24% = 30% + xx = (24% - 30%)x = -6%For the standard deviation, we need to use stdev.s function in Ms ExcelStandard deviation = stdev.s (14%,17%,-1%,-6%)Standard deviation = 0.112249722Standard deviation = 11.23%So, the standard deviation of the stock's returns for the four-year period is 11.23%.

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