A stock currently is paying 5% return. Calculate the 

following investment's expected rate of return and 

its standard deviation based on the data below. 

DATA 

Probability 
Return 

0.15 
0.05 

0.25 
0.15 

0.2 
0.2 

0.4 
0.25 
Expected return = Summantion( Probability * Return)
= 0.15*0.05 + 0.25*0.15 + 0.2*0.2 + 0.4*0.25
Expected Return = 17.00%
Standard Deviation = SQRT(Summation(Probability *(Return  Exp return)^2))
=SQRT(0.15(0.050.17)^2 + 0.25(0.150.17)^2 + 0.2(0.20.17)^2 + 0.4(0.250.17)^2 )
Standard deviation = 10.05%
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