An analyst gathered the following information about a common stock:
Probabilit………….Possible Rate of Return
0.35……………………..8%
0.3……………………………10%
0.25……………………….15%
0.1………………………20%
The expected return and expected standard deviation of returns, respectively, for the common stock are closest to:
A. 12% and 3.9%.
B. 12% and 15.3%.
C. 14% and 3.9%.
D. 14% and 15.3%.
Not getting the Standard deviation..anser is A
Variance =( .6^2 * 5^2 )+ (.4^2 * 4^2) + 2(.6)(.4)(5)(4)(.75) = (9) + (2.56) + (7.2) = 18.76
Standard Deviation = Sqrt(18.76) = 4.33
For questions 1 for Standard Dev do u take 5 or .05 4 or 0.04 and raise it to 2??.
.6^2*5^2 = 9 ????
I am CONFUSED NOW !!
发表于 2013-4-17 18:04
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