Calculate the standard deviation of the return

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Suppose that a security costs $3,000 today and Pays off some amount b in one year. Suppose that B. is uncertain according to the following table of Probabilities: b. : $3,000 $3,300 $3,600 $3,900 $4,200 Probability: 0.1 0.2 0.3 0.2 0.2 a Calculate the return (in percent) for each value Of b. (Note: You may just calculate the total Return and not worry about how this is split Between current yield and capital-gains yield.) B. Calculate the expected return (in percent). C. Calculate the standard deviation of the return. D. Suppose that an investor has a choice between Buying this security or purchasing a different Security that also costs $3,000 today but Pays off $3,300 with certainty in one year. How is an investor's choice of which security? To purchase related to his degree of risk Aversion?

Reference no: EM13243612

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