Homework Answers
1)
Expected return = 0.11*0.2 + 0.16*0.3 + 0.25*0.5
Expected return = 0.022 + 0.048 + 0.125
Expected return = 0.195 or 19.5%
2)
Standard deviation = [0.2(0.11 - 0.195)2 + 0.3(0.16 - 0.195)2 + 0.5(0.25 - 0.195)2]1/2
Standard deviation = [0.001445 + 0.000368 + 0.001513]1/2
Standard deviation = [0.003326]1/2
Standard deviation = 0.0577 or 5.77%
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