Question

Returns on stock X are listed below: Period 1 2 3 4 5 6 7 Stock X 4% 7% -2% 40% 0% 10% -1% What is the (population) standard deviation of the data?

Answer 1

The population standard deviation of the given data is approximately 14.68%.

Step-by-step explanation:

The standard deviation is a measure of how spread out the data points are from the mean. To calculate the population standard deviation, you can use the following formula:

σ = √[(Σ(x - μ)²) / N]

• Step 1: Calculate the mean (average) of the data points. For the given data, the mean is ((4+7+(-2)+40+0+10+(-1))/7) = 13/7 = 1.857.
• Step 2: Subtract the mean from each data point and square the result.
• Step 3: Sum up all the squared differences from Step 2.
• Step 4: Divide the sum from Step 2 by the number of data points (N).
• Step 5: Take the square root of the result from Step 4 to find the population standard deviation.
• For the given data, the population standard deviation is approximately 14.68%.