It costs $1,000 to enter the following game of chance,which is based on the outcome of a coin toss (fair coin).If the coin comes up 'heads' then you win and walk away with $1,100,which is a 10% rate of return.If the coin comes up 'tails',then you lose and walk away with $900,which is a -10% rate of return.What is the standard deviation of the returns?
A) 9%
B) 15%
C) 30%
D) 10%
E) 5%

Question

Quizplus · Accepted Answer

Expected return = E(k) = Pr₁k₁ + Pr₂k₂ + ... + Pr_nk_n Expected return = (0.5 × 0.1) + (0.5 × -0.1) Expected return = 0.00 or 0% Next, use the expected return to calculate the standard deviation: Standard deviation = 11ea7fdb_fc12_b0af_a768_7ffe1b05e1df_TB2902_11 Standard deviation = 11ea7fdb_fc12_b0b0_a768_9b8260c51942_TB2902_11 Standard deviation = 0.10 or 10%

It Costs $1,000 to Enter the Following Game of Chance,which