# Calculating the expected return and standard deviation

Consider the following probability distribution of returns for Alpha Corporation:

Current Stock Price ($25):

One Year ($) $35, $25, $20;

Return R: 40%, 0%, -20%;

Probability PR: 25%, 50%, 25%.

(A). Compute the expected return for Alpha Corporation.

(B). Compute the standard deviation of the return on Alpha Corporation.

https://brainmass.com/business/bond-valuation/calculating-expected-return-standard-deviation-495542

#### Solution Preview

Please refer attached file for better clarity of tables and missing formulas.

Expected Return

Probability, P Return(R) P*R

0.25 40% 0.1

0.50 0% ...

#### Solution Summary

The solution describes the steps to calculate the expected return and standard deviation in the given case.

$2.19