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Standard Deviation CEU

Standard deviation

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Nero Kasuto
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29 views12 pages

Standard Deviation CEU

Standard deviation

Uploaded by

Nero Kasuto
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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STANDARD DEVIATION

 is calculated as the square root of the


variance

 In finance ,is applied to the annual rate


of return of an investment to measure
the investment’s volatility .

 Is also known as historical volatility and


is used by investors as a gauge for the
amount of expected volatility.
VARIANCE :
 Is a mathematical expectation of the
average squared deviations from the
mean.

 Volatility :
 is a measure of risk ,so this statistics
can help determine the risk an
investor might take on when
purchasing a specific security.
STANDARD DEVIATION &
VARIANCE
 SD= Σ( x –Ⴟ )² SD = Σ( x –Ⴟ )²

n–1 n
 Sample is used Population is used

V = Σ (x- Ⴟ )²

n-1 V = Σ( x –Ⴟ )²

n
Where :x= the value of any particular
observation or measurement
Ⴟ = mean and n= is the
number of values
EXAMPLE :UNGROUP
DATA/SAMPLE
 The daily rates of a sample of eight employees
at GMS Inc. are
550,420,560,500,700,670,860,480. Find the
variance and standard deviation .

 Solution :
 Step1: Compute the mean of the data
Ⴟ =Σx/n=
550+420+560+500+700+670+860+480 / 8
= 4,740 /8
= 592.50
STEP2:
 Subtract the mean from each of the value data set.
 x x- Ⴟ
 550 -42.5
 420 -172.5
 560 -32.5
 500 -92.5
 700 107.5
 670 77.5
 860 267.5
 480 - 112.5

 Ⴟ =592.50
 Σ x= 4,740
STEP3
 Square the x- Ⴟ ,then get the sum
 ( x- Ⴟ ) ^2
 1,806.25
 29,756.25
 1,056.25
 8,556.25
 11,556.25
 6,006.25
 71,556.25
 12,656.25
 total Σ (x- Ⴟ)^2= 142,950
 The sum of the squared deviations
STEP4:
 Solve for variance and the standard
deviation.
 We can also obtain the standard
deviation by simply extracting the
square root of the variance.

 V= Σ (x- Ⴟ)^2 / n-1 = 142,950/8-1


 variance = 20,421.43
CONTINUATION:
 STD.DEVIATION :

 = 142,950/8-1
 = 20,421.43
 SD = 142.90
 Hence,the variance is PHP20,421.43 and
 The standard deviation is 142.90
EXAMPLE
UNGROUP/POPULATION
 The monthly incomes of the five
research directors of Recoletos schools
are 55,000, 59,500 ,62,500 ,57,000 ,and
61,000.Find the Variance and Standard
Deviation.

 Solution:
 Step1: Compute the mean of the data set
 Ⴟ = Σx/n
=55,000+59,500+62,500+57,000+61,000/5
 =295,000/5
 = PHP59,000
STEP2: SUBTRACT THE POPULATION
MEAN FROM EACH OF THE VALUE IN
THE DATA SET :

 x x-Ⴟ

 55,000 -4,000
 59,500 500
 62,500 3,500
 57,000 -2000
 61,000 2,000

 Ⴟ = 59,000
STEP3: GET THE SQUARE OF
X - Ⴟ ,THEN GET THE SUM

 ( x- Ⴟ ) ^2
 16,000,000
 250,000
 12,250,000
 4,000,000
 4,000,000

 Σ (x- Ⴟ)^2 =36,500,000


STEP4: SOLVE FOR THE POPULATION
VARIANCE & POPULATION
STD.DEVIATION

 Variance =Σ (x- Ⴟ)^2 /n


 = 36,500,000/5
 V = 7,300,000
 SO,STD.DEVIATION IS,
 7,300,000
 SD=2,701.85
 Hence,the population variance is
7,300,000 and population std. deviation
is 2,701.85

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