Instruction on calculating Standard Deviation in Excel

1. Instruction on calculating Standard Deviation in Excel

2. Standard Deviation Formula Standard Deviation: = Probability E( R )= Expected Return = Variance = Standard Deviation

3. 1. Copy the data to excel

4. 2. Calculate the Expected Return To calculate the Expected Return, the return column should get multiplied by probability column: Select a cell in excel Enter the = sign in the cell Select return cell, the * sign and then select the probability cell Press Enter Now we need the same formula for the rest of the cells, to do that we are going to drag: Place your mouse in the lower right corner of the cell (in this case D3), once you see the filled in plus sign, left click and drag down

5. 2. Calculate the Expected Return Cont. The next step in calculating the expected return is to add all the values in column “Return*Prop” Select a cell in excel Enter the = sign in the cell Type in SUM Double click on the formula and select the data Close parenthesis Press Enter

6. 3. Find the R – E( R ) On the next column near the data Enter the equal sign Select the first return Enter the minus sign Select the expected return Enter

7. 3. Continue • Next we want to copy the formula for the rest of the rows. To do this we need to make the expected returncell fixed • For that select the cell • Click next to the cell number (that contains the expected return) which in this example is D8 • Add $ next to cell column and row. i.e. $D$8

8. 3. Continue Now place your mouse in the lower right corner of the cell, once you see the filled in plus sign, left click and drag down

9. 4. [R – E( R )]^2 Go to the next column on the first row Enter the equal sign Select the R - ER cell, in this example E3 Then Shift + 6 ( to add ^ sign) The number 2 Enter

10. 4. Continue Now we need the same formula for all the other values. So place your mouse in the lower right corner of the cell, once you see the filled in plus sign, left click and drag down

11. 5. P * [R – E( R )]^2 Select a cell in excel Enter the = sign in the cell Select probability cell, the * sign and then select the [R – E( R )]^2 cell Press Enter

12. 5. Cont. Now we need the same formula for the rest of the cells: Place your mouse in the lower right corner of the cell once you see the filled in plus sign, left click and drag down

13. 6. Sum P*[R – E( R )]^2 Select a cell Enter the equal sign Enter the word SUM Double click on the formula Select the data Enter

14. 7. Take square root This is the last step. We need to take the square root of the number we found in part 6. To do that follow the following steps: Enter the equal sign into a cell Then type SQRT and select Excel's formula Select the cell from step 6 Enter