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For those using Kaplan – can someone explain why the book example on page 117 of book 1 takes the squared root of the sample variance to get your answer? On the question below … you are using the formula from the book. Trying to understand when to use the formula from the book vs simply taking the sq root.
A sample of returns for four randomly selected assets in a portfolio is shown below:
Asset Return (%)
A 1.3
B 1.4
C 2.2
D 3.4
A)
0.88%.
B)
1.13%.
C)
0.97%.