Theme 40. Finance and the formation of an investment portfolio

The population standard deviation of the return is defined as the square root of the population variance:

σ =

In Microsoft Excel, we can find population standard deviation using 2 methods.

Method 1 is “СТАНДОТКЛОН.Г” formula.
Method 2 is “КОРЕНЬ” formula from the population variance.
The answers will be the same.

σA = 10,13%

σВ = 2,79%

σ = 6,62%

Table with results:

Financial instruments	Expected rate of return, %	Population variance	Population standard deviation / risk
А	4,4	102,64	10,13
В	6,2	7,76	2,79
Index	5,8	43,76	6,62

Task 3.Determine the risk of an asset, represented by indicators of (corrected) sample variance (for n-1 years) and (corrected) sample standard deviation of return

The (corrected) sample variance of the asset yield is determined by the formula:

We can use “ДИСП.B” formula in Microsoft Excel.

(Corrected) = 128,3

(Corrected) = 9,7

(Corrected) = 54,7

The (corrected) sample standard deviation of the yield is:

σ =

In Microsoft Excel, we can find sample standard deviation using 2 methods.

Method 1 is “СТАНДОТКЛОН.B” formula.
Method 2 is “КОРЕНЬ” formula the (corrected) sample standard deviation.
The answers will be the same.

(Corrected) σA = 11,33%

(Corrected) σВ = 3,11%

(Corrected) σ = 54,7%

Table with results: