A company has a 40% probability of earning 20%,a 40% probability of earning 10%,and a 20% probability of earning 5%.The standard deviation is:
A) 13.0%
B) 36.0%
C) 37.0%
D) 6.0%
E) 15.0%

Question

Quizplus · Accepted Answer

Step 1 - Compute the expected return. Expected return = E(k) = Pr₁k₁+ Pr₂k₂ + ... + Pr_nk_n Expected return = (0.40 × 0.20) + (0.40 × 0.10) + (0.20 × 0.05)Expected return = 0.13 Step 2 - Use the expected return to calculate the standard deviation. Standard deviation = 11ea7fdb_fc11_ed4f_a768_6fc2716d97e5_TB2902_11 Standard deviation = 11ea7fdb_fc11_ed50_a768_8ff9cee2a606_TB2902_11 Standard deviation = 11ea7fdb_fc11_ed51_a768_59104a596e21_TB2902_11 = 0.06 or 6%

A Company Has a 40% Probability of Earning 20%,a 40