Stocks A, B, C, and D have returns of 10%, 20%, 30%, and 40%, respecti
Stocks A, B, C, and D have returns of 10%, 20%, 30%, and 40%, respectively. What is their variance?
A) 66.67%
B) 166.67%
C) 4.08%
D) 2.15%
ANSWER
Answer: B
Explanation: B) Mean return = (10% + 20% + 30% + 40%)/4 = 25%, so
variance = [(10% – 25%)2 + (20% – 25%)2 + (30% – 25%)2 + (40% – 25%)2]/(4 – 1)
= 500% /3 = 166.67%.
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