Calculating Expected Return from a Stock's Distribution
A stock's return has the following distributions:
Demand for the Probability of Rate of Return
Company's This Demand If This
Products Occuring 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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Please refer to the EXCEL for calculation
expected return = ...
Solution Summary
This solution describes the steps to calculate expected value, standard deviation and coefficient of variation for the given distribution of return. Excel sheet of calculations attached.