A stock's return has the following distribution: Demand for the Company's Products Probability of This Demand Occurring Rate of Return if This Demand Occurs (%) Weak 0.1 -20% Below average 0.2 -8 Average 0.4 6 Above average 0.2 30 Strong 0.1 65 1.0 Calculate the stock's expected return. Round your answer to two decimal places. % Calculate the standard deviation. Round your answer to two decimal places.
A stock's return has the following distribution: Demand for the Company's Products Probability of This Demand Occurring Rate of Return if This Demand Occurs (%) Weak 0.1 -20% Below average 0.2 -8 Average 0.4 6 Above average 0.2 30 Strong 0.1 65 1.0 Calculate the stock's expected return. Round your answer to two decimal places. % Calculate the standard deviation. Round your answer 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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Question
Expected Return: Discrete Distribution
A stock's return has the following distribution:
| Demand for the Company's Products |
Probability of This Demand Occurring |
Demand Occurs (%) |
||
| Weak | 0.1 | -20% | ||
| Below average | 0.2 | -8 | ||
| Average | 0.4 | 6 | ||
| Above average | 0.2 | 30 | ||
| Strong | 0.1 | 65 | ||
| 1.0 |
Calculate the stock's expected return. Round your answer to two decimal places.
%
Calculate the standard deviation. Round your answer to two decimal places.
%
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