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You have developed the following probability distribution for next quarter's EPS of HexChat, Inc. Probability EPS...

You have developed the following probability distribution for next quarter's EPS of HexChat, Inc.

Probability EPS
0.13 2.78
0.14 3.34
0.15 3.7
0.16 4.21
1-others 4.95

What is the standard deviation of the company's EPS?

Enter answer accurate to two decimal places.

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Answer #1

Calculation of expected EPS

Actual EPS (AE) Probability Expected EPS (EE)
2.78 0.13 0.3614
3.34 0.14 0.4676
3.7 0.15 0.555
4.21 0.16 0.6736
4.95 0.42 2.079
TOTAL 4.1366

Calculation of Standard deviation

AE EE AE-EE (AE-EE)^2 Probability {(AE-EE)^2}*Prob.
2.78 4.14 -1.3566 1.8404 0.13 0.2392
3.34 4.14 -0.7966 0.6346 0.14 0.0888
3.7 4.14 -0.4366 0.1906 0.15 0.0286
4.21 4.14 0.0734 0.0054 0.16 0.0009
4.95 4.14 0.8134 0.6616 0.42 0.2779
TOTAL 0.6354

standard deviation = square root of 0.6354 = 0.80

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