# Expected value, variance & standard deviation

4.11 An investment syndicate is trying to decide which two $200,000 apartment houses to buy. An advisor estimates the following probabilities for a five-year net returns ( in thousands of dollars):

Return: -50 0 50 100 150 200 250

Probability for house 1: .02 .03 .20 .50 .20 .03 .02

Probability for house 2: .15 .10 .10 .10 .30 .20 .05

a. Calculate the expected net return for house 1 and for house 2.

b. Calculate the respective variances and standard deviations.

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#### Solution Summary

The expert examines expected values, variance and standard deviation. A complete, neat and step-by-step solution is provided in the attached file.

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