What is the standard deviation of returns for asset B?

12.02%
The standard deviation of Stock B’s returns is 12.02%.

What is the standard deviation of the estimated returns?

To determine the norm of these returns (information about how dispersed the returns are), the standard deviation is calculated as the square root of the variance. This gives the average amount by which the returns over the six month period, deviate from the average return.

How do you calculate average return and standard deviation?

To find standard deviation on a mutual fund, add up the rates of return for the period you want to measure and divide by the total number of rate data points to find the average return. Further, take each individual data point and subtract your average to find the difference between reality and the average.

How do you calculate expected return on assets?

The expected return is the amount of profit or loss an investor can anticipate receiving on an investment. An expected return is calculated by multiplying potential outcomes by the odds of them occurring and then totaling these results.

Is it better to have a higher or lower standard deviation?

A high standard deviation shows that the data is widely spread (less reliable) and a low standard deviation shows that the data are clustered closely around the mean (more reliable).

How are expected returns and standard deviations calculated?

Then, add this value to 2 multiplied by the weight of the first asset and second asset multiplied by the covariance of the returns between the first and second assets. Finally, take the square root of that value, and the portfolio standard deviation is calculated. Expected return is not absolute, as it is a projection and not a realized return.

How to calculate variance and standard deviation of an asset?

The variance of the asset returns will then be the average of square of the difference between the returns and the mean. Where n is the number of periods in the data, Rt represents the returns for each time period and μ represents the mean returns. The standard deviation will simply be the square root of the variance.

What is the expected return of an asset?

The expected return of asset A is 6%, the expected return of asset B is 7%, and the expected return of asset C is 10%. [ (35% * 6%) + (25% * 7%) + (40% * 10%)] = 7.85% This is commonly seen with hedge fund and mutual fund managers, whose performance on a particular stock isn’t as important as their overall return for their portfolio.

What is the expected return of a portfolio?

For example, a portfolio has three investments with weights of 35% in asset A, 25% in asset B, and 40% in asset C. The expected return of asset A is 6%, the expected return of asset B is 7%, and the expected return of asset C is 10%.