A project will double your investment in one year with probability 0.58, otherwise you'll lose half of your investment. What is the standard deviation of this investment? Enter answer in percents, to two decimal places.

A project will double your investment in one year with probability 0.58, otherwise you'll lose half of your investment. What is the standard deviation of this investment? Enter answer in percents, to two decimal places.

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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A project will double your investment in one year with probability 0.58, otherwise you'll lose half of
your investment. What is the standard deviation of this investment?
Enter answer in percents, to two decimal places.

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Step 1: Formula.

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Step 2: Computation of return if investment is doubled.

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Step 3: Computation of return if investment is halved.

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Step 4: Computation of expected return of stock.

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Step 5: Computation of standard deviation of stock

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