Homework Answers
Expected Return = 0.40 * 0.20 + 0.30 * 0.10 + 0.30 *
(-0.02)
Expected Return = 0.104 or 10.4%
Variance = 0.40 * (0.20 - 0.104)^2 + 0.30 * (0.10 - 0.104)^2 +
0.30 * (-0.02 - 0.104)^2
Variance = 0.008304
Standard Deviation = (0.008304)^(1/2)
Standard Deviation = 0.091 or 9.1%
Coefficient of Variation = Standard Deviation / Expected
Return
Coefficient of Variation = 0.091 / 0.104
Coefficient of Variation = 0.88
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