Answer: 6.53%

The correct answer is A (6.53%). **Calculation Steps:** 1. **Calculate the mean:** Mean = (0.12 + 0.13 + 0.05 + 0.04 + 0.20) / 5 = 0.54 / 5 = 0.108 or 10.8% 2. **Calculate squared deviations from the mean:** - Stock A: (0.12 - 0.108)² = (0.012)² = 0.000144 - Stock B: (0.13 - 0.108)² = (0.022)² = 0.000484 - Stock C: (0.05 - 0.108)² = (-0.058)² = 0.003364 - Stock D: (0.04 - 0.108)² = (-0.068)² = 0.004624 - Stock E: (0.20 - 0.108)² = (0.092)² = 0.008464 3. **Sum of squared deviations:** Total = 0.000144 + 0.000484 + 0.003364 + 0.004624 + 0.008464 = 0.017080 4. **Calculate sample variance:** Since this is a sample (not the entire population), we use n-1 in the denominator: Sample variance = 0.017080 / (5 - 1) = 0.017080 / 4 = 0.00427 5. **Calculate sample standard deviation:** Sample standard deviation = √0.00427 = 0.06534 or 6.534% **Key Concept:** When calculating standard deviation from a sample (as opposed to the entire population), we use (n-1) in the denominator instead of n. This is called Bessel's correction, which provides an unbiased estimate of the population variance. The divisor (n-1) is known as degrees of freedom.

Author: Nikitesh Somanthe