Question

# A stock's returns have the following distribution: Demand for the Company's Products Probability of This Demand...

A stock's returns have the following distribution:

 Demand for the Company's Products Probability of This Demand Occurring Rate of Return If This Demand Occurs Weak 0.1 (48%) Below average 0.4 (7) Average 0.3 14 Above average 0.1 32 Strong 0.1 46 1.0

Calculate the stock's expected return. Round your answer to two decimal places.
%

Calculate the stock's standard deviation. Do not round intermediate calculations. Round your answer to two decimal places.
%

Calculate the stock's coefficient of variation. Round your answer to two decimal places.

Expected return=Respective return*Respective probability

=(0.1*-48)+(0.4*-7)+(0.3*14)+(0.1*32)+(0.1*46)

=4.40%

 probability Return probability*(Return-Expected value)^2 0.1 -48 0.1*(-48-4.4)^2=274.576 0.4 -7 0.4*(-7-4.4)^2=51.984 0.3 14 0.3*(14-4.4)^2=27.648 0.1 32 0.1*(32-4.4)^2=76.176 0.1 46 0.1*(46-4.4)^2=173.056 Total=603.44%

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

=24.57%(Approx).

Coefficient of variation=Standard deviation/Expected value

=(24.57/4.4)

=5.58(Approx).