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Standard deviation and coefficient of variation

A stock's return has the following distribution:

Demand for the Probability of This Rate of Return
Company's Products Demand Occuring if This Demand Occurs

Weak 0.1 (50%)

Below Average 0.2 (5%)

Average 0.4 16%

Above average 0.2 25%

Strong 0.1 60%

If the stock's expected return = 11.4%, calculate standard deviation and coefficient of variation.

Solution Preview

In order to calculate the standard deviation, we need to first calculate the variance.

variance = Summation ( expected ...

Solution Summary

The solution explains how to calculate the standard deviation of returns and the coefficient of variation.