Question

suppose that a stock produces a return of 12% with a probability of 0.3; it has 20% chance of producing 9% return and it has probability of 0.5 attached to a 4% return. Find risk-return measures as discussed in the video and in section 8-2 of the textbook. show how you calculated answer please!

Answer 1

Answer:'

Stock
Scenario	Probability	Return%	=rate of return% * probability	Actual return -expected return(A)%	(A)^2* probability
1	0,3	12	3,6	4,6	0,0006348
2	0,2	9	1,8	1,6	0,0000512
3	0,5	4	2	-3,4	0,000578
	Expected return %=	sum of weighted return =	7,4	Sum=Variance Stock=	0,00126
			Standard deviation of Stock%	=(Variance)^(1/2)	3,56

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