Compute the expected return and standard deviation given these four economic states,their likelihoods,and the potential returns:
A) 9.5 percent; 32.43 percent
B) 9.5 percent; 21.96 percent
C) 9.5 percent; 18.97 percent
D) 9.5 percent; 29.18 percent

Question

Compute the expected return and standard deviation given these four economic states,their likelihoods,and the potential returns: 
A) 9.5 percent; 32.43 percent 
B) 9.5 percent; 21.96 percent 
C) 9.5 percent; 18.97 percent 
D) 9.5 percent; 29.18 percent

Quizplus · Accepted Answer

Expected return = 0.2 × 60% + 0.5 × 13% + 0.15 × −15% + 0.15 × −45% = 9.5%.
Standard Deviation = 11ea8218_2987_9a21_bbd8_65f3dad8b746_TB1326_00 = 11ea8218_2987_c132_bbd8_8bbd0e27d019_TB1326_00 = 32.43%

Compute the Expected Return and Standard Deviation Given These Four