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 0.2 (34%) Below average 0.1 (15) Average 0.4 13 Above average 0.1 33 Strong 0.2 49 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

=(0.2*-34)+(0.1*-15)+(0.4*13)+(0.1*33)+(0.2*49)=10%

 probability Return probability*(Return-Mean)^2 0.2 -34 0.2*(-34-10)^2=387.2 0.1 -15 0.1*(-15-10)^2=62.5 0.4 13 0.4*(13-10)^2=3.6 0.1 33 0.1*(33-10)^2=52.9 0.2 49 0.2*(49-10)^2=304.2 Total=810.4%

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

=28.47%(Approx)

Coefficient of variation=Standard deviation/Mean

=(28.47/10)=2.85(Approx).

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