12) A project has a probability of 0.3 to generate a payoff of $15m, and 0.7...

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12) A project has a probability of 0.3 to generate a payoff of $15m, and 0.7 with payoff of $5m. a. What is the expected payo

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Answer 1

Answer #1

1.
Expected payoff=0.3*15+0.7*5=8 million
Variance=0.3*(15-8)^2+0.7*(5-8)^2=21 million^2
Standard Deviation=sqrt(21)=4.582575695 million

2.
Expected returns=0.3*(15/6-1)+0.7*(5/6-1)=33.3333333 %
Variance=0.3*(15/6-1-1/3)^2+0.7*(5/6-1-1/3)^2=5833.33333%^2
Standard deviation=sqrt(5833.3333%%)=76.3762616%

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Answer 2

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