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Calculating the standard deviation in the given case

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Given the following information, what is the standard deviation for this stock?

Probabilities:
Recession:0.3
Normal:0.45
Boom:0.25

Returns:
Recession:12%
Normal:8%
Boom:-16%

1. 11.21 percent
2. 9.85 percent
3. 12.87 percent
4. 10.75 percent
5. 9.22 percent

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Solution Summary

Solution describes the steps to calculate standard deviation in the given case.

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Please refer attached file for format and formulas.

Correct option is 1

Probability P Return ( R) P*R
Recession 0.30 12% 0.036
Normal 0.45 8% ...

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  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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