Find the weighted average return (0.10)(−5) + (0.30)(−2) + (0.50)(10) + (0.10)(31) = 7%.
Next, take differences, square them, multiply by the probability of the event and add them up. That is the variance. Take the square root of the variance for Std. Dev. (0.1)(−5 − 7)2 + (0.3)(−2 − 7)2 + (0.5)(10 − 7)2 + (0.1)(31 − 7)2 = 100.8 = variance.
100.80.5 = 10.04%.
