Question

What is the standard deviation of a portfolio's returns if the mean return is 15%, the variance of returns is 184, and there are three stocks in the portfolio?

Answer 1

In the problem, the given data is the mean and the variance. Now to solve this problem, we must remember that the formula for variance is:

Variance = s^2

Where s is equivalent to the standard deviation, therefore:

s = sqrt (Variance)

Calculating for the value of the standard deviation given Variance = 184:

s = sqrt (184)

s = 13.56 % (ANSWER)