Evaluate standard deviation of return on barbaras investment

Reference no: EM132316

Question:

1. Barbara is investing in a stock and is aware that the return on that investment is mainly sensitive to how the economy is performing. Her analysis suggests that 4 states of the economy will 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. Evaluate the standard deviation of the return on Barbara's investment?

Reference no: EM132316

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