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Expected Returns: Discrete Distribution
The market and Stock J have the following probability distributions:
Probability rM rJ
0.3 13% 20%
0.4 10 4
0.3 19 11
Calculate the standard deviation for the market. Round your answer to two decimal places.
Calculate the standard deviation for Stock J. Round your answer to two decimal places.
Identify what the sources of costs might be. Actual costings are not part of this exercise. Always be on the lookout for the hidden costs that can turn an apparent saving into an actual loss.
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