Homework Answers
| Solution 3 | ||||||
| Scenario | Probability | Retrun | Retrun* Probability | Deviation=Return-Expected return | Deviation^2 | Probability*Deviation^2 |
| Boom | 0.2800 | 0.5350 | 0.1498 | 0.4225 | 0.1785 | 0.0500 |
| Normal Growth | 0.2300 | 0.2000 | 0.0460 | 0.0875 | 0.0077 | 0.0018 |
| Recession | 0.4900 | (0.1700) | (0.0833) | (0.2825) | 0.0798 | 0.0391 |
| Total | 0.1125 | Total | 0.0908 | |||
| So expected return is 11.25% | ||||||
| So option 2 is correct | ||||||
| Solution 4 | ||||||
| Stock variance | 0.0908 | |||||
| Stock Standard deviation | '9.0847%^(0.5) | |||||
| Stock Standard deviation | 0.3014 | |||||
| Solution 5 | ||||||
| Co-efficient of variation= | Standard Deviation*100/Mean | |||||
| Co-efficient of variation= | '0.301409*100/0.1125 | |||||
| Co-efficient of variation= | 267.9196 | |||||
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