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Expected Return and Standard Deviation of a Security

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Given the following probability distribution, what is the expected return and the standard deviation of returns for security J?

state 1, probability 0.2, expected return 10%
state 1, probability 0.6, expected return 15%
state 3, probability 0.2, expected return 20%

a. 15%; 6.50%
b. 12%; 5.18%
c. 15%; 3.16%
d. 15%; 10.00%
e. 20%; 5.00%

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Solution Summary

This solution looks at given probability distributions for a security and calculates the expected return and standard deviation for that security.

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