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Financial Risk Manager Part 1

Financial Risk Manager Part 1


Explanation:

Explanation

To compute the sample standard deviation, we use the formula for sample variance:

s2=1(n−1)[∑i=1nx2−nxˉ2]s^2 = \frac{1}{(n-1)} \left[ \sum_{i=1}^{n} x^2 - n \bar{x}^2 \right]s2=(n−1)1​[∑i=1n​x2−nxˉ2]

Where:

  • ∑x=31,353\sum x = 31,353∑x=31,353 (sum of all observations)
  • n=100n = 100n=100 (sample size)
  • ∑x2=10,687,041\sum x^2 = 10,687,041∑x2=10,687,041 (sum of squared observations)

Step 1: Calculate the sample mean (xˉ\bar{x}xˉ)

xˉ=∑xn=31,353100=313.53\bar{x} = \frac{\sum x}{n} = \frac{31,353}{100} = 313.53xˉ=n∑x​=10031,353​=313.53

Step 2: Calculate the sample variance (s2s^2s2)

s2=1(100−1)[10,687,041−100×(313.53)2]s^2 = \frac{1}{(100-1)} \left[ 10,687,041 - 100 \times (313.53)^2 \right]s2=(100−1)1​[10,687,041−100×(313.53)2]

First, calculate xˉ2=(313.53)2=98,301.0609\bar{x}^2 = (313.53)^2 = 98,301.0609xˉ2=(313.53)2=98,301.0609

Then, $100 \times 98,301.0609 = 9,830,106.09$

Now, $10,687,041 - 9,830,106.09 = 856,934.91$

Finally, s2=856,934.9199=8,655.9082s^2 = \frac{856,934.91}{99} = 8,655.9082s2=99856,934.91​=8,655.9082

Step 3: Calculate the sample standard deviation (sss)

s=s2=8,655.9082=93.0371≈93s = \sqrt{s^2} = \sqrt{8,655.9082} = 93.0371 \approx 93s=s2​=8,655.9082​=93.0371≈93

Key Points:

  • The sample variance uses (n−1)(n-1)(n−1) in the denominator (Bessel's correction) for unbiased estimation
  • The sample standard deviation is the square root of the sample variance
  • The result matches option B (93)
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Compute the sample standard deviation given the following sample data:

∑x=31,353\sum x = 31,353∑x=31,353

n=100n = 100n=100

∑x2=10,687,041\sum x^2 = 10,687,041∑x2=10,687,041

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Community
NNikitesh
Last updated: February 2, 2026 at 10:22
0

    A

    86

    26.7%

    B

    93

    60.0%

    C

    71

    13.3%

    D

    75

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