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 0.1 (44%) Below average 0.2 (8) Average 0.3 11 Above average 0.3 40 Strong 0.1 74 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 returns*Respective probabilties

=(0.1*-44)+(0.2*-8)+(0.3*11)+(0.3*40)+(0.1*74)=16.7%

 Probability Return Probability*(Return-Mean)^2 0.1 -44 0.1*(-44-16.7)^2=368.449 0.2 -8 0.2*(-8-16.7)^2=122.018 0.3 11 0.3*(11-16.7)^2=9.747 0.3 40 0,3(40-16.7)^2=162.867 0.1 74 0.1*(74-16.7)^2=328.329 Total=991.41%

SD=[Total Probability*(Return-Mean)^2/Total Probability]^(1/2)

=31.49%(Approx).

CV=SD/mean

=(31.49/16.7)

=1.89(Approx).

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