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Ratios Made Simple: A beginner's guide to the key financial ratios by Robert Leach

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9. Volatility

9.1: Volatility Ratio

Definition

Volatility = (((Period high – period low) ÷ 2) ÷ current share price) x 100

Period high means the highest price at which that share has been traded during the period. This is usually shown in the Financial Times as high.

Period low is the lowest price for which that share has been traded during the period. This is similarly indicated in lists of share prices.

Subtracting the low from the high and dividing by two gives the average amount (in pence) by which the share price has deviated from its average.

Suppose a share has a high of 120p and a low of 90p. The figure for (period high – period low) ÷ 2 is 15p, which is half the difference of 30p. This means that the share price was never ...

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