Assume that the following returns are a sample of annual returns for firms in the clothing industry. Given the following sample of returns, what are the sample variance and standard deviation?
The sample variance is found by taking the sum of all squared deviations from the mean and dividing by (n − 1). [(15 − 3)2 + (2 − 3)2 + (5 − 3)2 + (-7 − 3)2 + (0 − 3)2] / (5 − 1) = 64.5
The sample standard deviation is found by taking the square root of the sample variance. √64.5 = 8.03
