What Is the Standard Deviation of Returns on a Stock

question 46

Multiple Choice

What is the standard deviation of returns on a stock priced today at $10 that has a 25 percent probability of increasing to $13,a 50 percent probability of increasing to $12,a 15 percent probability of increasing by 5 percent,and a 10 percent probability of decreasing to $ 7?

• A) 0.0094
• B) 0.0286
• C) 0.0968
• D) 0.1692

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Definitions:

Operationalization

The process of strictly defining variables into measurable factors, allowing for the collection and analysis of data for research purposes.

Abstract Level

A level of analysis or thought that is complex, dealing with ideas and concepts that are not immediately visible or tangible, often requiring significant thought and interpretation.

Perceptual Patterns

The ways in which individuals organize and interpret sensory information from their environment, forming meaningful understandings of the world.

Sensations

The immediate experiences generated from the stimulation of the senses, including sight, sound, smell, taste, and touch.