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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

    Calculate the stock's expected return, standard deviation, and coefficient of variation.

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    Solution Preview

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


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

    Solution Summary

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