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
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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