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    Calculate expected return, standard deviation of return

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    The following table shows the one year return distribution of Startup, Inc.

    Calculate:
    a) The expected return.
    b) The standard deviation of the return.

    Probability 40% 20% 20% 10% 10%
    Return -100% -75% -50% -25% 1000%

    (show calculations)

    © BrainMass Inc. brainmass.com June 4, 2020, 1:25 am ad1c9bdddf
    https://brainmass.com/business/bond-valuation/399030

    Solution Preview

    Expected return = 0.4 X -1 + 0.2 X -0.75 + 0.2 X -0.50 + 0.1 X -0.25 + 0.1 X 10 = 0.325. Expected return is 32.5%.

    To compute std. dev., first we need the ...

    Solution Summary

    Calculate expected return, standard deviation of return

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