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 corect, which investment would you choose, considering both risk and return? Hint: Make sure to round al intermediate calculations to at least seven (7) decimal places. The input instructions, phrases in parenthesis after each answer bax, What is the variance of tho stock investment? Os (Round to five decimal places.) Forecasted Returns for Each Economy Stable Investment Boom drowth Stagnant Recession - 12% 2% 6% Stock 24% 12% Corporate bond 9% 8% 4% Government bond 8% 7% 5% 3%
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 corect, which investment would you choose, considering both risk and return? Hint: Make sure to round al intermediate calculations to at least seven (7) decimal places. The input instructions, phrases in parenthesis after each answer bax, What is the variance of tho stock investment? Os (Round to five decimal places.) Forecasted Returns for Each Economy Stable Investment Boom drowth Stagnant Recession - 12% 2% 6% Stock 24% 12% Corporate bond 9% 8% 4% Government bond 8% 7% 5% 3%
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
Related questions
Question
15
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%
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Recommended textbooks for you
MATLAB: An Introduction with Applications
Statistics
ISBN:
9781119256830
Author:
Amos Gilat
Publisher:
John Wiley & Sons Inc
Probability and Statistics for Engineering and th…
Statistics
ISBN:
9781305251809
Author:
Jay L. Devore
Publisher:
Cengage Learning
Statistics for The Behavioral Sciences (MindTap C…
Statistics
ISBN:
9781305504912
Author:
Frederick J Gravetter, Larry B. Wallnau
Publisher:
Cengage Learning
MATLAB: An Introduction with Applications
Statistics
ISBN:
9781119256830
Author:
Amos Gilat
Publisher:
John Wiley & Sons Inc
Probability and Statistics for Engineering and th…
Statistics
ISBN:
9781305251809
Author:
Jay L. Devore
Publisher:
Cengage Learning
Statistics for The Behavioral Sciences (MindTap C…
Statistics
ISBN:
9781305504912
Author:
Frederick J Gravetter, Larry B. Wallnau
Publisher:
Cengage Learning
Elementary Statistics: Picturing the World (7th E…
Statistics
ISBN:
9780134683416
Author:
Ron Larson, Betsy Farber
Publisher:
PEARSON
The Basic Practice of Statistics
Statistics
ISBN:
9781319042578
Author:
David S. Moore, William I. Notz, Michael A. Fligner
Publisher:
W. H. Freeman
Introduction to the Practice of Statistics
Statistics
ISBN:
9781319013387
Author:
David S. Moore, George P. McCabe, Bruce A. Craig
Publisher:
W. H. Freeman