Question
Use the following information on states of the economy and stock returns to calculate the standard...
Use the following information on states of the economy and stock returns to calculate the standard deviation of returns. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
| State of Economy | Probability of State of Economy |
Security
Return if State Occurs |
||||||||||
| Recession | .35 | −9.00 | % | |||||||||
| Normal | .30 | 14.00 | ||||||||||
| Boom | .35 | 23.00 | ||||||||||
Standard Deviation: ?%
Homework Answers
Answer #1
The Standard Deviation of Stock= 13.77% approx.
Detailed calculations is attached in the image.
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