(a) The following table shows the one-year return distribution of Startup, Inc. Calculate (i) The expected return....
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Question:
(a) The following table shows the one-year return distribution of Startup, Inc. Calculate
(i) The expected return. (3 marks)
(ii) The standard deviation of the return. (3 marks)
Probability 40% 30% 30%
Return -10% -5% 45%
b) Briefly explain how diversification can reduce risk. (3 marks)
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