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A certain financial analyst defines the volatility of a stock during

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Carcass
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A certain financial analyst defines the volatility of a stock during [#permalink] New post   05 Apr 2022, 08:47
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A certain financial analyst defines the “volatility” of a stock during a given week to be the result of the following procedure: find the absolute value of the difference in the stock's closing price for each pair of consecutive days in the week and then find the average (arithmetic mean) of these 4 values. What is the volatility of Stock X during the week shown in the table?

A. 0.50
B. 1.80
C. 2.00
D. 2.25
E. 2.50
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Re: A certain financial analyst defines the volatility of a stock during [#permalink] New post   14 Apr 2022, 02:19
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\(V = \frac{|19-21|+|22-19|+|24.5-22|+|23-24.5|}{4}\)

\(V = \frac{2+3+2.5+1.5}{4 }= \frac{9}{4} =2.25\)

Answer: D
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Re: A certain financial analyst defines the volatility of a stock during [#permalink] New post   14 Apr 2022, 05:09
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Carcass wrote:
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A certain financial analyst defines the “volatility” of a stock during a given week to be the result of the following procedure: find the absolute value of the difference in the stock's closing price for each pair of consecutive days in the week and then find the average (arithmetic mean) of these 4 values. What is the volatility of Stock X during the week shown in the table?

A. 0.50
B. 1.80
C. 2.00
D. 2.25
E. 2.50

Absolute difference from Monday to Tuesday = |19 - 21| = 2
Absolute difference from Tuesday to Wednesday = |22 - 19| = 3
Absolute difference from Wednesday to Thursday = |24.5 - 22| = 2.5
Absolute difference from Thursday to Friday = |23 - 24.5| = 1.5

Average of the absolute differences = (2 +3 + 2.5 + 1.5)/4 = 9/4 = 2.25

Answer: D
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Re: A certain financial analyst defines the volatility of a stock during [#permalink]
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