Following are three economic states, their likelihoods, and the potential returns: Economic State Probability Return Fast...

Question

Question

Following are three economic states, their likelihoods, and the potential returns:

Determine the standard deviation of the expected return. (Do not round intermediate calculations and round your answer to 2 decimal places.)

Answer 1

Answer #1

Expected return=Respective return*Respective probability

=(0.24*30)+(0.36*7)+(0.4*-19)=2.12%

probability	Return	probability*(Return-Expected Return)^2
0.24	30	0.24*(30-2.12)^2=186.550656
0.36	7	0.36*(7-2.12)^2=8.573184
0.4	-19	0.4*(-19-2.12)^2=178.42176
		Total=373.5456%

Standard deviation=[Total probability*(Return-Expected Return)^2/Total probability]^(1/2)

=(373.5456)^(1/2)

=19.33%(Approx).

Add a comment

Answer 2

Similar Homework Help Questions

Following are three economic states, their likelihoods, and the potential returns: Economic State Fast growth Slow...

Following are three economic states, their likelihoods, and the potential returns: Economic State Fast growth Slow growth Recession Probability 0.24 0.36 0.40 Return 36% 11 -28 Determine the standard deviation of the expected return. (Do not round intermediate decimal places.) Standard deviation
Following are three economic states, their likelihoods, and the potential returns: Probability Economic State Return Fast...

Following are three economic states, their likelihoods, and the potential returns: Probability Economic State Return Fast growth Slow growth 0.20 301 0.58 5 0.22 -35 Recession Determine the standard deviation of the expected return. (Do not round intermediate calculations and round your answer to 2 decimal places.) Standard deviation
Following are four economic states, their likelihoods, and the potential returns. Economic States Probability Return Fast...

Following are four economic states, their likelihoods, and the potential returns. Economic States Probability Return Fast Growth 0.33 56% Slow Growth 0.42 15% Recession 0.15 -12% Depression 0.10 -42% Calculate the expected return and Standard Deviation (round answers to two decimal places.) PLEASE include the excel formulas for expected return and standard deviation. Thanks.

Following are four economic states, their likelihoods, and the potential returns Economic StateProbability Return Fast growth...

Following are four economic states, their likelihoods, and the potential returns Economic StateProbability Return Fast growth Slow growth Recessiorn Depression 0.28 0.4219 0.24-24 006 55 80% Compute the expected return and standard deviation. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Expected return Standard deviation
Compute the expected return given these three economic states, their likelihoods, and the potential returns: (Round...

Compute the expected return given these three economic states, their likelihoods, and the potential returns: (Round your answer to 2 decimal places.) Economic State | Probability | Return Fast growth: 0.29 30 % Slow growth: 0.4 3 Recession: 0.30 –27
Compute the expected return given these three economic states, their likelihoods, and the potential returns: (Round...

Compute the expected return given these three economic states, their likelihoods, and the potential returns: (Round your answer to 2 decimal places.) Economic State Probability Return Fast growth 0.26 60 % Slow growth 0.37 27 Recession 0.37 –39

Compute the expected return given these three economic states, their likelihoods, and the potential returns: (Round...

Compute the expected return given these three economic states, their likelihoods, and the potential returns: (Round your answer to 1 decimal place). Economic State Probability Return Fast growth 0.3 40 % Slow growth 0.4 10 Recession 0.3 –25
The correct formula for excel please!! Following are four economic states, their likelihoods, and the potential...

The correct formula for excel please!! Following are four economic states, their likelihoods, and the potential returns. Economic State Fast growth Slow growth Recession Depression Probability 0.33 0.42 0.15 0.10 Return 56% 15% -12% -42% Compute the expected return and standard deviation. (Do not round intermediate calculations and round your answers to 2 decimal places.) Expected return Standard Deviation Sheet1 ... + DY
Compute the expected return given these three economic states, their likelihoods, and the potential returns: Economic...

Compute the expected return given these three economic states, their likelihoods, and the potential returns: Economic State Probability Return Fast growth 0.2 35 % Slow growth 0.6 10 Recession 0.2 –30

Expected Return Compute the expected return given these three economic states, their likelihoods, and the potential...

Expected Return Compute the expected return given these three economic states, their likelihoods, and the potential returns: Economic State Probability Return Fast Growth .3 31.5% Slow Growth .4 6.75% Recession .3 -2.75%