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Finding Expected Return, Variance Return and Standard Deviation

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Consider the following probability distribution of returns for Alpha Corporation:

Current Stock Price ($) Stock Price in One Year ($) Return R Probability PR
$35 40% 25%
$25 $25 0% 50%
$20 -20% 25%

What is the expected return for Alpha Corporation? What is the variance return on Alpha Corporation? What is the standard deviation of the return on the Alpha Corporation?

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Solution Summary

Solutions explains steps to find the expected return, variance return and standard deviation.

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Expected return = Sum(Probability X return)
Expected return = 0.25 X 40% + 0.5 X 0% ...

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