Calculate the expected standard deviation on stock: State of the economy Probability of the states Percentage...

Question

Question

Calculate the expected standard deviation on stock:

Round the answers to two decimal places in percentage form. (Write the percentage sign in the "units" box)

Answer 1

Answer #1

Ans 5.52%

STATE	Probability (P)	RETURN (Y)	(P * Y )	P * (Y -Average Return of Y)^2
ECONOMIC RECESSION	10%	2	0.20	7.57
STEADY ECONOMIC GROWTH	39%	6	2.34	8.62
BOOM	51%	16	8.16	14.33
		TOTAL	10.70	30.51


Expected Return =		(P * Y)
		10.70%

VARIANCE =		P * (Y -Average Return of Y)^2
		30.5100


Standard Deviation =		Square root of (P * (Y -Average Return of Y)^2)
		Square root of 30.51
		5.52

Answer 2

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