Question

if the standard deviation of a portfolio's returns is known to be 30%, then its variance is: multiple choice 5.48. 90.45. 900.00. 30.

Answer 1

The variance of a portfolio's returns with a standard deviation of 30% is 900.00.

Step-by-step explanation:

If the standard deviation of a portfolio's returns is known to be 30%, then its variance is the square of the standard deviation. To calculate the variance, you square the standard deviation:

Variance = (Standard Deviation)²
Variance = (30%)²
Variance = 0.30 * 0.30
Variance = 0.09 or 9%

However, variance is often expressed in percentage points squared. To convert this to that form, you multiply by 100 to get from 0.09 to 9, and then by another 100 to account for the squaring:
Variance = 0.09 * 100 * 100
Variance = 900

Therefore, the variance of the portfolio's returns is 900.00.