An investment has the following range of outcomes and probabilities.

Outcomes (Percent) Probabilities of Outcomes

6% .25

9% .50

10% .25

Calculate the expected value and the standard deviation (round to two places after the decimal point where necessary).

A.

Expected value = 8.50

Standard deviation = 1.50

Refer to Equation 17-1

Ki Pi KiPi

6% .25 1.50

9% .50 4.50

10% .25 2.50

KiPi 8.50