Question

You anticipate that an investment has a 30% chance of earning a
20% return, a 40% chance of earning a 5% return, and a 30% chance
of earning 12%. What is the standard deviation of this
investment? **Answer in percent form to two
decimal places.**

Answer #1

Ans 6.22

Probability (P) | RETURN (Y) | (P * Y ) | P * (Y -Average Return of Y)^2 | |

30% | 20 | 6.00 | 21.17 | |

40% | 5 | 2.00 | 17.42 | |

30% | 12 | 3.60 | 0.05 | |

TOTAL | 11.60 | 38.64 | ||

Expected Return = | (P * Y) | |||

11.60% | ||||

VARIANCE = | P * (Y -Average Return of Y)^2 | |||

38.6400 | ||||

Standard Deviation = | Square root of (P * (Y -Average Return of Y)^2) | |||

Square root of 38.64 | ||||

6.22 | ||||

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Enter your answer rounded to two decimal places. Do not enter % in
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