Paper instructions
Objective: Calculate returns and riskiness of returns for various assets Introduction: Standard deviation is a proven mathematical methodology to measure the level of volatility for return on investments. When financial managers compare two funds with identical annualized returns, the fund with a lower standard deviation is typically the most attractive. The most common measure used for fund Assessment is standard deviation. Activity Details: Step 1: Introduction about Standard Deviation and Risk Provide a definition and introduction about “standard deviation” and explain how it is used to quantify risk. The overall written analysis essay should include a minimum of three references cited within the content of the paper and the reference page according to APA guidelines. Step 2: Standard Deviation 5 Step Procedure Examine, in order, the five-step procedure for finding the standard deviation. Provide a brief description of each step and its purpose when possible. Review internal course readings and external sites about the standard deviation five-step procedure. Note: you may find external sites that use more than five steps. It is okay to include and write about more than five standard deviation steps. Optional: Insertion of an Excel example Describe and address: • How to calculate the expected rate of return of the investment • Why it is best practice to subtract the expected rate of return of 15% from each of the possible rates of return and square the difference? • Explain the purpose for multiplying the squared differences calculated in step 2 by the probability that those outcomes will occur • Why it is necessary to sum all the values calculated in step 3 together? • What does the square root of the variance calculated in step 4 describe? Step 3: Asses and Conclude • Assess whether it is possible to diversify away the risk inherent in investments • Assess whether the standard deviation of a portfolio is, or is not, a weighted average of the standard deviations of the assets in the portfolio • Write a brief summary conclusion of what you have learned about “standard deviation” and how it is used quantify risk
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Instructions on paper
Calculate the returns and riskiness of returns for a variety of assets. Introduction: The standard deviation is a well-established mathematical tool for calculating the level of volatility in investment returns. When comparing two funds with comparable annualized returns, the one with the lower standard deviation is usually the most appealing. The standard deviation is the most frequent metric for evaluating funds. Activity Details: Step 1: Introduction about Standard Deviation and Risk Provide a definition and introduction about “standard deviation” and explain how it is used to quantify risk. The overall written analysis essay should include a minimum of three references cited within the content of the paper and the reference page according to APA guidelines. Step 2: Standard Deviation 5 Step Procedure Examine
