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    Expected return and standard deviation

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    Please explain how to calculate the expected return and standard deviation of returns when your only given possible outcomes and probability returns.

    Possible Outcomes Probability Returns (%)
    Pessimistic 0.25 5
    Most likely 0.55 10
    Optimistic 0.20 13

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    The expected return is calculated as the sum of (probability X returns) for each state
    The expected ...

    Solution Summary

    The solution explains how to calculate expected return and standard deviation