1. You are considering investing in a project with the following possible outcomes:

Probability of Investment

States Occurrence Returns

State 1: Economic boom 18% 20%

State 2: Economic growth 42% 16%

State 3: Economic decline 30% 3%

State 4: Depression 10% -25%

Calculate the expected rate of return and standard deviation of returns for this investment, respectively.

A) 8.72%, 12.99%

B) 7.35%, 12.99%

C) 3.50%, 1.69%

D) 2.18%, 1.69%

1. You are considering investing in a project with the following possible outcomes:

Probability of Investment

States Occurrence Returns

State 1: Economic boom 18% 20%

State 2: Economic growth 42% 16%

State 3: Economic decline 30% 3%

State 4: Depression 10% -25%

Calculate the expected rate of return and standard deviation of returns for this investment, respectively.

A) 8.72%, 12.99%

B) 7.35%, 12.99%

C) 3.50%, 1.69%

D) 2.18%, 1.69%