Question

# Integrative—Expected return, standard​ deviation, and coefficient of variation   An asset is currently being considered by Perth...

IntegrativeExpected return, standard​ deviation, and coefficient of variation   An asset is currently being considered by Perth Industries. The probability distribution of expected returns for this asset is shown in the following​ table,

 j Pr ​Return, r 1 0.05 15.00​% 2 0.15 5.00​% 3 0.70 0.00​% 4 0.05 −5.00​% 5 0.05 −10.00​%

.

a.Calculate the expected value of​ return, r​,

for the asset.

b. Calculate the standard​ deviation, for the​ asset's returns.

c. Calculate the coefficient of​ variation,

CV​, for the​ asset's returns.

 S. no. Probability (P) Return = R P * R P * (R - R')2 1 0.05 15.00% 0.01 0.00102 2 0.15 5.00% 0.01 0.00027 3 0.70 0.00% 0.00 0.00004 4 0.05 -5.00% 0.00 0.00017 5 0.05 -10.00% -0.01 0.00058 Expected return (R') = 0.0075 0.00207 Expected return 0.75% Standard Deviation =SQRT(0.02624) Standard Deviation 0.045 4.5% CV =Standard Deviation / R' CV =0.045 / 0.00207 6.064468466

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