MATLAB: An Introduction with Applications
MATLAB: An Introduction with Applications
6th Edition
ISBN: 9781119256830
Author: Amos Gilat
Publisher: John Wiley & Sons Inc
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Variance and standard deviation (expected). Bacon and Associates, a famous Northwest think tank, has provided probability estimates for the four potential
economic states for the coming year in the following table: . The probability of a boom economy is 20%, the probability of a stable growth economy is 40%,
the probability of a stagnant economy is 24%, and the probability of a recession is 16%. Calculate the variance and the standard deviation of the three
investments: stock, corporate bond, and govermment bond. If the estimates for both the probabilities of the economy and the returms in each state of the
economy are correct, which investment would you choose, considering both risk and return?
Hint: Make sure to round all intermediate calculations to at least seven (7) decimal places. The input instructions, phrases in parenthesis after each answer box,
What is the variance of the stock investment?
ON (Round to five decimal places.)
Forecasted Returns for Each Economy
Stable
Investment
Вoom
Crowth
Stagnant
Recession
- 12%
4%
Stock
24%
12%
2%
Corporate bond
9%
8%
6%
Government bond
8%
7%
5%
3%
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Transcribed Image Text:Variance and standard deviation (expected). Bacon and Associates, a famous Northwest think tank, has provided probability estimates for the four potential economic states for the coming year in the following table: . The probability of a boom economy is 20%, the probability of a stable growth economy is 40%, the probability of a stagnant economy is 24%, and the probability of a recession is 16%. Calculate the variance and the standard deviation of the three investments: stock, corporate bond, and govermment bond. If the estimates for both the probabilities of the economy and the returms in each state of the economy are correct, which investment would you choose, considering both risk and return? Hint: Make sure to round all intermediate calculations to at least seven (7) decimal places. The input instructions, phrases in parenthesis after each answer box, What is the variance of the stock investment? ON (Round to five decimal places.) Forecasted Returns for Each Economy Stable Investment Вoom Crowth Stagnant Recession - 12% 4% Stock 24% 12% 2% Corporate bond 9% 8% 6% Government bond 8% 7% 5% 3%
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