You plan to make an investment. given the following probability distribution of returns, what is the...
You plan to make an investment. given the following probability distribution of returns, what is the expected return on the investment ? if the standard deviation of the return is $77,460, what is the CV of the investment ?
market condition probability profit $000'
good 30% 300
normal 40% 200
bad 30% 100
Homework Answers
Expected return=Respective return*Respective probability
=(0.3*300,000)+(0.4*200,000)+(0.3*100,000)
=$200,000
CV=Standard deviation/Expected return
=77460/200000
=0.3873
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