Let the variance of returns for a share per month be ##\sigma_\text{monthly}^2##.

What is the formula for the variance of the share's returns per year ##(\sigma_\text{yearly}^2)##?

Assume that returns are independently and identically distributed (iid) so they have zero auto correlation, meaning that if the return was higher than average today, it does not indicate that the return tomorrow will be higher or lower than average.

**Question 308** risk, standard deviation, variance, no explanation

A stock's standard deviation of returns is expected to be:

- 0.09 per
**month**for the first 5 months; - 0.14 per
**month**for the next 7 months.

What is the expected standard deviation of the stock per **year** ##(\sigma_\text{annual})##?

Assume that returns are independently and identically distributed (iid) and therefore have zero auto-correlation.

**Question 559** variance, standard deviation, covariance, correlation

Which of the following statements about standard statistical mathematics notation is **NOT** correct?

The standard deviation and variance of a stock's annual returns are calculated over a number of years. The units of the returns are percent per annum ##(\% pa)##.

What are the units of the standard deviation ##(\sigma)## and variance ##(\sigma^2)## of returns respectively?

**Hint**: Visit Wikipedia to understand the difference between percentage points ##(\text{pp})## and percent ##(\%)##.

**Question 988** variance, covariance, beta, CAPM, risk, no explanation

Price Data Time Series |
|||||||||||

Sourced from Yahoo Finance Historical Price Data | |||||||||||

Date | S&P500 Index (^GSPC) | Apple (AAPL) | |||||||||

Open | High | Low | Close | Adj close | Open | High | Low | Close | Adj close | ||

2007, Wed 3 Jan | 1418 | 1429 | 1408 | 1417 | 1417 | 12.33 | 12.37 | 11.7 | 11.97 | 10.42 | |

2008, Wed 2 Jan | 1468 | 1472 | 1442 | 1447 | 1447 | 28.47 | 28.61 | 27.51 | 27.83 | 24.22 | |

2009, Fri 2 Jan | 903 | 935 | 899 | 932 | 932 | 12.27 | 13.01 | 12.17 | 12.96 | 11.28 | |

2010, Mon 4 Jan | 1117 | 1134 | 1117 | 1133 | 1133 | 30.49 | 30.64 | 30.34 | 30.57 | 26.6 | |

Source: Yahoo Finance. | |||||||||||

Which of the following statements about the above table which is used to calculate Apple's equity beta is **NOT** correct?