Explore BrainMass
Share

Calculating expected return and standard deviation

An analyst believes that the economic conditions during the next year will either be Strong, Normal or Weak and she thinks that the Simpson Company's returns will have the following probability distribution. What's the standard deviation of Simpson's returns as estimated by this analyst?

PROBABILITY RETURN

STRONG 30% 24%
NORMAL 40% 15%
WEAK 30% -10%.

Solution Preview

Please refer attached file for complete solution. Expression typed with the help of Equation writer are missing here.

Solution:

Economic conditions Probability Return
...

Solution Summary

Solution describes the steps to calculate expected returns and standard deviation of returns.

$2.19