Question

# Consider the following information:    Rate of Return if State Occurs   State of Economy Probability of...

 Consider the following information:

 Rate of Return if State Occurs State of Economy Probability of State of Economy Stock A Stock B Recession 0.10 0.06 -0.18 Normal 0.60 0.08 0.16 Boom 0.30 0.16 0.35

 Required:

 Given that the expected return for Stock A is 10.200%, calculate the standard deviation for Stock A. (Do not round your intermediate calculations.)

#### Homework Answers

Answer #1

Ans 6.15

the standard deviation for Stock A is 6.15

 Stock Probability (P) RETURN (Y) (P * Y ) P * (Y -Average Return of Y)^2 Recession 10% -6 -0.60 22.50 Normal 60% 8 4.80 0.60 Boom 30% 16 4.80 14.70 TOTAL 9.00 37.80 Expected Return = (P * Y) 9.00% VARIANCE = P * (Y -Average Return of Y)^2 37.8000 Standard Deviation = Square root of (P * (Y -Average Return of Y)^2) Square root of 37.80 6.15
Know the answer?
Your Answer:

#### Post as a guest

Your Name:

What's your source?

#### Earn Coins

Coins can be redeemed for fabulous gifts.

##### Not the answer you're looking for?
Ask your own homework help question
ADVERTISEMENT
##### Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

ADVERTISEMENT