If the return on stock A in year 1 was 6 %, in year 2 was 3 %, in year 3 was 18 % and in year 4 was 3 %, what was the standard deviation of returns for stock A over this four year period? (Round your answer to 1 decimal place and record without a percent sign. If your final answer is negative, place a minus sign before the number with no space between the sign and the number).

12.4

Explanation:

We need to,first of all, determine the arithmetic average return of all the returns, which is the sum of the returns divided by the number of returns

average return=(6%+3%+18%+3%)/4

average return=7.50%

Yearsreturn(return-average return)(return-average return)^2

1          6.00%        -1.50%                            0.022500%

2          3.00%       -4.50%                             0.202500%

3         18.00%         10.50%                               1.102500%

4         3.00%       -4.50%                               0.202500%

        average return7.50%           variance1.530000%

                   standard deviation=variance^(1/2)12.4%