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Expected return and standard deviation

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A3. (Expected return and standard deviation) An investment has four possible returns, each
with its own probability given here.
a. What is the expected return?
b. What are the variance and the standard deviation of returns?

Return −12% −2% 8% 30%
Probability 0.20 0.25 0.3 0.20

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Solution Summary

The expected return and standard deviation are determined. The variance of the returns was determined.

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For the calculation of standard deviation, first we have calculated ...

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  • Chartered Accountant (Equivalent to CPA in US), Institute of Charted Accountants of India
  • Bachelor of Commerce, West Bengal University
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