Question

		Security Returns if State Occurs
State of Economy	Probability of State of Economy	Roll		Ross
Bust	0.60	–14	%	15	%
Boom	0.40	32		5

Calculate the standard deviations for Roll and Ross by filling in the following table: (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 4 decimal places.)

State of Economy	Probability of State of Economy	Return Deviation from Expected Return	Squared Return Deviation	Product
Roll
Bust	0.60
Boom	0.40
			σ2 =
Ross
Bust	0.60
Boom	0.40	-0.0600	0.0036
			σ2 =

(Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

Answer 1