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 (48%) Below average 0.2 (8) Average 0.3 17 Above average 0.2 28 Strong 0.1 71 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 probabilities

=(0.2*-48)+(0.2*-8)+(0.3*17)+(0.2*28)+(0.1*71)=6.6%

 Probability Return Probability*(REturn-mean)^2 0.2 -48 0.2*(-48-6.6)^2=596.232 0.2 -8 0.2*(-8-6.6)^2=42.632 0.3 17 0.3*(17-6.6)^2=32.448 0.2 28 0.2*(28-6.6)^2=91.592 0.1 71 0.1*(71-6.6)^2=414.736 Total=1177.64

SD=[Total Probability*(REturn-mean)^2/Total Probability]^(1/2)
which is equal to

=34.32%(Approx)

CV=SD/mean

=(34.32/6.6)=5.20(Approx).

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