Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Evaluating Stand-Alone Risk: Example 9-4, (page 411)

  1. Conestoga Ltd. has the following estimated probability distribution of returns.

                                    Return                          Probability

                                        4%                                .20

                                      12%                                .50

                                      14%                                .30

Calculate Conestoga’s expected return, the variance and standard deviation of its expected return and the return’s coefficient of variation. 

Please explain to me in detail how the variance of returns is obtained.

I don't understand the equation used to get the answer.

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