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Discrete Distribution: Calculating Expected Return, Standard Deviation and CV

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A stock's return has the following distribution:

Demand for the Probability of This Rate of Rate of Return if This Company's Products Demand Occurring Demand Occurs

Weak 0.1 (50%)
Below average 0.2 (5)
Average 0.4 16
Above average 0.2 25
Strong 0.1 60
1.0

Calculate the stock's expected return, standard deviation, and coefficient of variation.

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Solution Summary

This solution describes the steps to calculate expected value, standard deviation and coefficient of variation for the given distribution of return.

Solution Preview

Please refer attached file for complete solution. Formulas typed with the help of equation writer are missing here.

Demand Probability of demand Return Mean
P X P*X X-Mean ...

Solution provided by:
Lokesh Jain, MSc
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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