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    Expected return,standard deviation, coefficient of variation

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    USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEMS Your expectations from a one year investment in HiTech Computers is as follows:
    Probability Rate of Return
    .15 -.10
    .15 -.20
    .35 .00
    .25 .15
    .10 .15

    1. What is the expected return from this investment?
    2. What is the standard deviation of your expected return from this investment?
    3. What is the coefficient of variation of this investment?

    Please show calculations.

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    Solution Preview

    1. What is the expected return from this investment?

    Expected return is calculated as
    Expected return = Sum (Probability X Rate of return)
    We multiply each return by its probability and then sum all the values
    Expected return = 0.15 X -0.1 + 0.15 X -0.2 + 0.35 ...

    Solution Summary

    The solution explains how to calculate expected return, standard deviation, and coefficient of variation.