(Expected rate of return and risk) B. J. Gautney Enterprises is evaluating a security. One-year Treasury bills are currently paying 3.9 percent. Calculate the investment's expected return and its standard deviation. Should Gautney invest in this security? Probability Return 0.20 −5 % 0.50 4 % 0.10 5 % 0.20 8 %
(Expected rate of return and risk) B. J. Gautney Enterprises is evaluating a security. One-year Treasury bills are currently paying 3.9 percent. Calculate the investment's expected return and its standard deviation. Should Gautney invest in this security? Probability Return 0.20 −5 % 0.50 4 % 0.10 5 % 0.20 8 %
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
(Expected
risk)
B. J. Gautney Enterprises is evaluating a security. One-year Treasury bills are currently paying
3.9
percent. Calculate the investment's expected return and its standard deviation. Should Gautney invest in this security?|
Probability
|
Return
|
|
|---|---|---|
|
0.20
|
−5
|
%
|
|
0.50
|
4
|
%
|
|
0.10
|
5
|
%
|
|
0.20
|
8
|
%
|
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on the icon
spreadsheet.)
Question content area bottom
Part 1
a. The investment's expected return is
enter your response here%.
(Round to two decimal places.)b. the investment's standard devation is? round 2 decimal places
c. should gautney invest in this security?
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