What is the standard deviation of an investment

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Reference no: EM132970586

Question: You are going to invest all of your funds in one of three projects with the following distribution of possible returns: PROJECT 1 PROJECT 2

Probability Return Standard Deviation Probability Return Standard Deviation
50% Chance 20% 12% 30% Chance 30% 19.5%
50% Chance -4% 40% Chance 10%
30% Chance -20%

PROJECT 3
Standard
Probability Return Deviation
10% Chance 30% 12%
40% Chance 15%
40% Chance 10%
10% Chance -21%
If you are a risk averse investor, which one should you choose?

2. What is the standard deviation of an investment that has the following expected scenario? If there is an 18% probability of a recession with a 2.0% return; if there is a 65% probability of a moderate economy with a 9.5% return; if there is a 17% probability of a strong economy with a 14.2% return.

3. The rate on 6 month T-bills is currently 5%. Andvark Company stock has a beta of 1.69 and a required rate of return of 15.4%. According to CAPM, determine the return on the market portfolio.

4. In 2020 Pepsi had total sales of Kes 20,438,000, depreciation expenses of Kes 138,000 and Pepsi also had to pay Kes 420,000 on bank loans? In addition their cost of goods sold amounted to Kes 9,132,000.

Reference no: EM132970586

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