Question

# You are given the following probability distribution for CHC Enterprises: State of Economy Probability Rate of...

You are given the following probability distribution for CHC Enterprises:

 State of Economy Probability Rate of return Strong 0.25 22% Normal 0.45 9% Weak 0.30 -6%

What is the stock's expected return? Do not round intermediate calculations. Round your answer to two decimal places.

%

What is the stock's standard deviation? Do not round intermediate calculations. Round your answer to two decimal places.

%

What is the stock's coefficient of variation? Do not round intermediate calculations. Round your answer to two decimal places.

Expected return=Respective return*Respective probability

=(0.25*22)+(0.45*9)+(0.3*-6)

=7.75%

 probability Return probability*(Return-Expected Return)^2 0.25 22 0.25*(22-7.75)^2=50.765625 0.45 9 0.45*(9-7.75)^2=0.703125 0.3 -6 0.3*(-6-7.75)^2=56.71875 Total=108.1875%

Standard deviation=[Total probability*(Return-Expected Return)^2/Total probability]^(1/2)

=(108.1875)^(1/2)

=10.40%(Approx)

Coefficient of variation=Standard deviation/Expected return

=10.40/7.75

=1.34(Approx)