Question

What is the expected return, variance, and the standard deviation for the stock? Prob Return of...

What is the expected return, variance, and the standard deviation for the stock?

Prob

Return of A

21%

6%

28%

-29%

15%

-15%

5%

12%

31%

11%
  • A.

    5.5% 2.15%, and 15.2%

  • B.

    5.1% , 2.95%, and 15.40%

  • C.

    4.10% 3.95%, and 16.80%

  • D. -5.10%, 2.95%, and 17.19%

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Answer #1

Expected return, variance and standard deviation = -5.10% , 2.95% , 17.19% respectively.

Option D is correct.

Expected Return :-

Probability Return of A Expected return
21% 6% 1.2600%
28% -29% -8.1200%
15% -15% -2.2500%
5% 12% 0.6000%
31% 11% 3.4100%
Expected Return -5.1%

Variance :-

Probability Return of A Deviation (Return- Expected return) square of Deviation Variance
21% 6% 11.100% 1.232% 0.25874%
28% -29% -23.900% 5.712% 1.59939%
15% -15% -9.900% 0.980% 0.14702%
5% 12% 17.100% 2.924% 0.14621%
31% 11% 16.100% 2.592% 0.80355%
Variance 2.95%

Standard deviation = square root ( variance) = (2.95%)1/2 = (0.0295)1/2 = 0.171898

Standard deviation =17.19%

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