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Question 25 An analyst developed the following probability distribution of the rate of return for a...

Question 25

  1. An analyst developed the following probability distribution of the rate of return for a common stock:

    Scenario               Probability                          Rate of return

    Recession              0.20                                        -0.05

    Normal                  0.60                                        0.10

    Boom                     0.20                                        0.25

    The standard deviation of the rate of return is closest to:

    1.

    0.0849
    2.

    0.0949
    3.

    0.0649
    4.

    0.0745
    5.

    0.0875
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