Answered: Given the following probability…

Given the following probability distribution, what are the expected return and the standard deviation of returns for Security J? State Pi ri 1 0.5 11% 2 0.3 8% 3 0.2 5% O 9.40%; 2.04% O 8.90%; 2.34%

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter2: Risk And Return: Part I

Section: Chapter Questions

Problem 3Q: Security A has an expected return of 7%, a standard deviation of returns of 35%, a correlation...

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Question

Given the following probability distribution, what are the expected return and the standard
deviation of returns for Security J?
State
Pi
ri
1
0.5
11%
2
0.3
8%
3
0.2
5%
O 9.40%; 2.04%
O 8.90%; 2.34%
O 7.40%; 2.94%
O 8.40%; 2.64%
O 7.90%; 1.74%

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