Question
A financial analyst following Singh, Inc. has created the following probability distribution to describe Singh's expected return over the next year. Singh's fortunes rely on
A financial analyst following Singh, Inc. has created the following probability distribution to describe Singh's expected return over the next year. Singh's fortunes rely on the success of a new product. The probability distribution shown reflects the analyst's expectation of the stock's return depending on how well the new product sells.
Condition | Probability | Return |
---|---|---|
Bad | 0.30 | -40% |
Average | 0.40 | 10% |
Great | 0.30 | 45% |
What is the expected return on the stock?
5.50%
2.00%
21.00%
19.00%
22.50%
What is the expected standard deviation of stock returns? (Hint: Please do not round any intermediate calculations. Round your final answer to 2 decimals)
25.67%
33.12%
26.57%
30.51%
33.38%
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