Sample Question #77 (statistics – sample variance)

What’s the standard deviation of this data series: -3, -2, -1, 0, 1, 2, 3?

(Comment: in the real quant world, we use software to calculate standard deviations; Excel, for instance, has the stdev() function. But it’s still useful to know how this very important statistic is calculated)

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ANSWER

The answer is 2.16. BTW, I "cheated" by using Excel’s stdev() function. But you should now the sample variance formula: sample variance = sum[x(i) – avg(x)]^2 / (n-1), where n is the number of observations. Standard deviation is just the square root of this.