Table 1. 1 contains some computations of the expected rate of return and variance of returns for an asset. Assume that the probability ps are changed to 0. 30, 0. 40, and 0. 30 in states 1, 2, and 3, respectively. Recompute the results to create a new Table 1. 1.

Table 1.1

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Table 1.1 Expected rate of return calculation (in percent terms) Rsj| Ps Rsj State Ps= probability 1 2 3 0.25 0.50 0.25 1.00 5 1.25 5.00 3.75 E (R) = 10 10 15 Rsj - E(Rsj) [Rsj-E(Rsj) -5 0 5 25 0 25 Ps[Rsj E(Rsj)1 6.25 0.00 6.25 a(Rj): 12.50 (Rj) = 3.5355