An analyst has developed the following probability distribution of the rate of return for a common...
An analyst has developed the following probability distribution of the rate of return for a common stock.
Scenario Probability Rate of Return
1 .30 -6%
2 .38 4%
3 .32 28%
a. Calculate the expected rate of return. (Round your answer to 2 decimal places.)
Expected rate of return %
b. Calculate the variance and standard deviation of this probability distribution. (Round your intermediate calculations to 4 decimal places and final answers to 2 decimal places.) Variance Standard deviation
Homework Answers
Solution:
(a).
The expected rate of return is:
(b).
The variance is given below:
The standard deviation is:
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An analyst has developed the following probability distribution
of the rate of return for a common...
An analyst has developed the following probability distribution for the rate of return for a common...
An analyst has developed the following probability distribution for the rate of return for a common stock. Scenario Probability Rate of Return 0.24 0.47 0.29 -8% 2% 25% a. Calculate the expected rate of return. (Round intermediate calculations to at least 4 decimal places. Round your answer to 2 decimal places.) Expected rate of return b. Calculate the variance and the standard deviation of this probability distribution. (Use the percentage values for your calculations (for example 10% not 0.10). Round...
An analyst has developed the following probability distribution for the rate of return for a common...
An analyst has developed the following probability distribution for the rate of return for a common stock. Scenario Probability Rate of Return 0.24 0.47 0。29 -8% 2% 25% 2 a. Calculate the expected rate of return. (Round intermediate calculations to at least 4 decimal places. Round your answer to 2 decimal places.) Expected rate of 6271% b. Calculate the variance and the standard deviation of this probability distribution. (Use the percentage values for your (for example 10% not 0.10). Round...
An analyst has developed the following probability distribution for the rate of return for a common...
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An analyst has developed the following probability distribution for the rate of return for a common stock. Scenario Probability Rate of Return 0.24 0.47 0.29 -8% 2% 25% a. Calculate the expected rate of return. (Round intermediate calculations to at least 4 decimal places. Round your answer to 2 decimal places.) Expected rate of return b. Calculate the variance and the standard deviation of this probability distribution. (Use the percentage values for your calculations (for example 10% not 0.10). Round...
An analyst has developed the following probability distribution for the rate of return for a common stock. Scenario Probability Rate of Return 0.24 0.47 0。29 -8% 2% 25% 2 a. Calculate the expected rate of return. (Round intermediate calculations to at least 4 decimal places. Round your answer to 2 decimal places.) Expected rate of 6271% b. Calculate the variance and the standard deviation of this probability distribution. (Use the percentage values for your (for example 10% not 0.10). Round...
An analyst has developed the following probability distribution for the rate of return for a common stock. f Return 0.29 0.50 0.21 -17% 158 a. Calculate the expected rate of return. (Round intermediate calculations to at least 4 decimal places. Round your answer to 2 decimal places.) Expected rate of return b. Calculate the variance and the standard deviation of this probability distribution. (Use the percentage values for your calculations (for example 10% not 0.10). Round intermediate calculations to at...
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