| Scenario | RC Value | Probability of Scenario |
| 1 | -0.01 | 0.1 |
| 2 | -0.03 | 0.2 |
| 3 | 0.01 | 0.4 |
| 4 | 0.02 | 0.2 |
| 5 | 0.04 | 0.1 |
Q: What is the standard deviation of the return on Stock C next week, i.e., what is the value of SD[RC]? Choose the closest from the answers below.
or
Q: What is the value of SD[RC], or the standard deviation of the return on Stock C the next week? From the following responses, select the one that is closest.
- 0.051
- 0.041
- 0.031
- 0.011
- 0.021
Explanation: The standard deviation measures the dispersion of the random return values around the expected return. By calculating the variance first and then taking the square root, we find that the standard deviation of the return on Stock C next week is approximately 0.0210.021, indicating the average distance of the return values from the expected return.
