How can you tell if an investment is volatile as far as percentage changes?

Question

I'm taking an economics class and there was a homework question about the volatility of investments. When looking at the percentage changes from one quarter to the next should I look at how big the diffrence is (i.e. 20% in quarter 1 16% in quarter 2) regardless if the number is positive or negative or how often it goes up and down ?

Answer 1

For price changes calculate the standard deviation from quarter to quarter, or any time period you want.  The higher the standard deviation the higher the volatility.