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    Possible outcomes of Potential Investment

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    In answering the following questions, it is given that the potential investment has the following range of possible outcomes and probabilities: 10% probability of a -20% return, 40% probability of a 15% return, 40% probability of a 25% return, and a 10% probability of a 50% return. (a) Calculate the weighted mean of the probability distribution; (b) Calculate the variance of the probability distribution; (c) Calculate the standard deviation of the probability distribution. (d) Calculate the coefficient of variation of the probability distribution. (e) Would another investment having a coefficient of variation of .25 appear to offer a higher return per unit of risk?

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