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Calculating expected return, standard deviation and CV

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A stock's returns have the following distribution:
Demand for the Company's Products - Probability of this Demand Occurring - Rate of Return If This 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

Solution describes the methodology to calculate expected return, standard deviation and coefficient of variation in the given case.

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

Solution:

Demand Probability of demand Return Mean
P X P*X X-Mean (X-Mean)^2 ...

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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