Question

The return on Luccasen Corp. next year depends on how strong the economy is: Economy Probability...

The return on Luccasen Corp. next year depends on how strong the economy is:

Economy Probability Return

very strong 0.2 25%

normal 0.4 8%

weak 0.3 4%

recession 0.1 -10%

What is the expected return (average) based on this information?

What is the standard deviation of these returns?

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Answer #1

Answer :-

Expected Return (based on information above) :- 8.40%

Standard Deviation of these returns :- 9.74

Detailed calculation & explanation is attached below :

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