1) Myers Business Systems is evaluating the introduction of a new product. The possible levels of unit sales and the probabilities of their occurrence are given below:
Possible Market Reaction Sales in Units Probabilities
Low response 20 .10
Moderate response 40 .30
High response 55 .40
Very high response 70 .20
a. What is the expected value of unit sales for the new product?
b. What is the standard deviation of unit sales?
See the attached file for complete solution. The text here may not be copied exactly as some of the symbols / tables may not print.
1. Myers Business Systems is evaluating the ...
This post explains how to calculate the expected return and standard deviation for the risky investments, which provides different pay off under different scenarios.