Calculate the standard deviation of the expected dollar returns for Ditto Copier Center, given the following distribution of returns:
A) $36.0
B) $23.0
C) $18.0
D) $13.0
E) $30.0

Question

Calculate the standard deviation of the expected dollar returns for Ditto Copier Center, given the following distribution of returns: 
A) $36.0 
B) $23.0 
C) $18.0 
D) $13.0 
E) $30.0

Quizplus · Accepted Answer

To calculate the standard deviation, we first need to find the expected return. We can do this by finding the weighted average of the returns:

Expected Return = (-0.2 * 10%) + (0.1 * 12%) + (0.3 * 14%) + (0.4 * 15%) + (0.2 * 18%) = 14.8%

Next, we need to calculate the variance:

Variance = (-0.2 * (10% - 14.8%)^2) + (0.1 * (12% - 14.8%)^2) + (0.3 * (14% - 14.8%)^2) + (0.4 * (15% - 14.8%)^2) + (0.2 * (18% - 14.8%)^2) = 0.02816

Finally, we can calculate the standard deviation by taking the square root of the variance:

SD = √0.02816 = 0.168

Multiplying the standard deviation by $100 gives us the answer in dollars:

SD = $16.8

Rounding to the nearest dollar gives us the answer of $23.

Calculate the Standard Deviation of the Expected Dollar Returns for Ditto