Question

Calculate the expected standard deviation on stock:

State of the economy	Probability of the states	Percentage returns
Economic recession	25%	1%
Steady economic growth	22%	9%
Boom	Please calculate it	17%

Answer 1

Ans 6.70

State of the economy	Probability (P)	RETURN (Y)	(P * Y )	P * (Y -Average Return of Y)^2
Economy recession	25%	1	0.25	26.21
Steady economic growth	22%	9	1.98	1.10
Boom	53%	17	9.01	17.58
		TOTAL	11.24	44.90
Expected Return =		(P * Y)
		11.24%
VARIANCE =		P * (Y -Average Return of Y)^2
		44.9024
Standard Deviation =		Square root of (P * (Y -Average Return of Y)^2)
		Square root of 44.9024
		6.70