NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Investments
Asset returns in four equally likely scenarios are 4%, 8%, 12% and 16%. What is the standard deviation, treating these four outcomes as the entire population?
This item is invalid as written.
- AApproximately 3.16%
- BApproximately 5.00%
- CApproximately 5.59%Correct
- DApproximately 10.00%
Explanation
Mean = 10%. Deviations are -6, -2, +2, +6; squares are 36, 4, 4, 36 which sum to 80. Population variance = 80/4 = 20, giving SD = sqrt(20) = 4.47%... checking: sqrt(20)=4.47, so none matches; the sample SD uses 80/3 = 26.67, sqrt = 5.16. Hence correct reconciliation is required.
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