A) You are considering investing in a firm that has the following possible outcomes: Economic boom: probability of 25%; return of 25% Economic growth: probability of 60%; return of 15% Economic decline: probability of 15%; return of -5% What is the expected rate of return on the investment?

B)You are considering investing in a firm that has the following possible outcomes: Economic boom: probability of 25%; return of 25% Economic growth: probability of 60%; return of 15% Economic decline: probability of 15%; return of -5% What is the standard deviation of returns on the investment? Calculation steps: Step 1: calculate the Expected value of the rate of the return, E(R). Step 2: take the difference between the rate of return of each economic conditions and the value of E(R). Step 3: square the values of Step 2. Step 4: multiply the values of the Step 3 with its corresponding probability. Step 5: Sum the values of Step 4, which is the variance. Step 6: take the square roof of Step 5 value.