Question

Question 42 Returns on PQR, Inc. are forecast to be the following: State Probability Return Boom 0.25 28% Normal 0.65 15% Bust 0.10 -15% What is the standard deviation of this company's stock? 12.07% 11.78% 11.50% 11.22% 10.96% Moving to another question will save this response. Ques esc BO A + $ 4 % 5 & 7 8 0 9 ON 3 2 Р 0 U W E T Y R Q

Answer 1

expected return

=probability*return

=0.25*28%+0.65*15%+0.10*(-15%)

=15.25%

standard deviation=(0.25*(28%-15.25%)^2+0.65*(15%-15.25%)^2+0.10*(-15%-15.25%)^2)^(1/2)

=11.50%