Question

Donna is looking into investing a portion of her recent bonus into the stock market. While researching different companies, she discovers the following standard deviations of one year of daily stock closing prices. Masterful Pocket Watches: Standard deviation of stock prices =$9.65 Perfect Plungers Plus: Standard deviation of stock prices =$1.02 Based on the data and assuming these trends continue, which company would give Donna a stable long-term investment?

Answer 1

Answer:

Perfect Plungers Plus is the company that would give Donna a stable long term investment

Explanation:

Because it has a low standard deviation than the other company, meaning it has the expected value as a low standard deviation is, also its data is not far from the mean and is not spread out.

Answer 2

Answer:

Perfect Plunges Plus

Explanation:

Masterful Pocket watches has a standard deviation of $9,65

Perfect Plunges Plus has a standard deviation of $1,02

Standard deviation  measures the price variability to closing prices and since Perfect Plunges Plus has a smaller standard meaning it has smaller variability to closing prices than master pocket watches Donna should choose it for her long-term investment.