Question

Ford Motor Company had realized returns of 5​%, 15​%, −15​%, and −5​% over four quarters. What is the quarterly standard deviation of returns for​ Ford?
a. 32.86​%.
b. 24.65​%.
c. 30.12​%.
d. 27.39​%.

Answer 1

Answer: 12.91%

Explanation:

The mean is;

= (5% + 15% - 15% - 5%)/4

= 0

Standard deviation = √((∑(Return-mean)^2)/[time period-1])

= (√((5-0)^2 + (15-0)^2 + (-15-0)^2 + (-5-0)^2)/ (4 -1))

= √((25% + 225% + 225% + 25% ) / 3 )

= √(500/3)

= 12.91%

NB - Options are for a different question.