Explore BrainMass

Explore BrainMass

    Expected value and standard deviation for firm's ROE

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Here are the estimated ROE distributions for Firms A, B, and C.

    Probability
    .1 .2 .4 .2 .1
    Firm A: ROEa 0% 5% 10% 15% 20%
    Firm B: ROEb 2% 5% 12% 19% 26%
    Firm C: ROEc 5% 5% 15% 25% 35%

    Calculate the expected value and standard deviation for Firm C's ROE.
    ROEa=10%, standard deviation=5.5% ROEb=12% SDb=7.7%.

    © BrainMass Inc. brainmass.com June 3, 2020, 8:13 pm ad1c9bdddf
    https://brainmass.com/business/return-on-equity/expected-value-standard-deviation-firm-128781

    Solution Summary

    Given the probability distribution of a firms' ROE, expected value and standard deviation of ROE are calculated (see attachment).

    $2.19

    ADVERTISEMENT