Determine the expected return on barbaras investment

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Reference no: EM132619

Question:

1. Barbara is considering investing in a stock and is aware that the return on that investment is particularly sensitive to how the economy is performing. Her analysis suggests that 4 states of the economy can affect the return on the investment. Using the table of returns and probabilities below, Evaluate

Probability Return

Boom 0.3 25.00%

Good 0.3 15.00%

Level 0.2 10.00%

Slump 0.2 -5.00%

a. Determine the expected return on Barbara's investment?

b. What is the standard deviation of the return on Barbara's investment?

Reference no: EM132619

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