Solve: Expected Mean, Variance and Standard Deviation
Not what you're looking for?
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?
Purchase this Solution
Solution Summary
This solution indicates the steps required to calculate the expected mean, variance, standard deviation and coefficient of variation of the given probability distribution. An Excel attachment file is provided which presents the solution in a neat manner.
Solution Preview
Please refer attached file for the complete solution. Expressions typed with the help of an equation writer are missing here.
a) Calculate the weighted mean of the probability distribution
Probability P Return ( R) P*R
0.1 -20% -0.02
0.4 15% 0.06
0.4 25% 0.1
0.1 50% 0.05
...
Education
- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India
Recent Feedback
- "Thank you"
- "Really great step by step solution"
- "I had tried another service before Brain Mass and they pale in comparison. This was perfect."
- "Thanks Again! This is totally a great service!"
- "Thank you so much for your help!"
Purchase this Solution
Free BrainMass Quizzes
SWOT
This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.
Change and Resistance within Organizations
This quiz intended to help students understand change and resistance in organizations
Business Ethics Awareness Strategy
This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.
Team Development Strategies
This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.
Academic Reading and Writing: Critical Thinking
Importance of Critical Thinking