Question

Use the following table to compute the standard deviation of return given the following scenario analysis...

Use the following table to compute the standard deviation of return given the following scenario analysis for the stock market of a developing country A. Which choice comes closest to the standard deviation? (Use 3 decimal points in the intermediate steps).

A

B

C

D

E

F

Scenario

Probability

Expected Return in each scenario(%)

B * C

Deviation from the mean

B*Squared Deviation

Recession

0.2

-35%

Normal

0.7

5%

Boom

0.1

17%

Average=

Variance=

Standard Deviation=

39%

15%

8.5%

36.5%

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