Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Can someone help me figure out the variance and standard deviation? I calculated the expected cash payoff and expected rate of return, but when I
Can someone help me figure out the variance and standard deviation? I calculated the expected cash payoff and expected rate of return, but when I use the formulas for variance and standard deviation, it is not correct.
Problem 7-7 Expected return and standard deviation A game of chance offers the following odds and payoffs. Each play of the game costs $100, so the net profit per play is the payoff less $100. Probability 0.10 0.50 0.40 Payoff $600 100 0 Net Profit $500 0 -100 a-1. What is the expected cash payoff? (Round your answer to the nearest whole dollar amount.) a-2. What is the expected rate of return? (Enter your answer as a percent rounded to the nearest whole number.) b-1. What is the variance of the expected returns? (In the calculation, use the percentage values, not the decimal values for the rates of return. Do not round intermediate calculations. Round your answer to the nearest whole number.) b-2. What is the standard deviation of the expected returns? (Enter your answer as a percent rounded to 2 decimal places.) la-1. $ 110 a-2. Expected cash payoff Expected rate of return Variance 101% b-1. 100 b-2. Standard deviation 10.00%Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started