COMPUTATIONS FOR STANDARD DEVIATION OF AN ASSET ASSET A Outcome Return E(Return) rrr Prob (P) (ri-r)? (ri-r) P, Pessimistic Most Likely optimistic 0.25 0.5 0.25 0.18 0.2 0.221 0.2 0.2 0.2 -0.02 o 0.02 0.0004 O o 0.0004 6- 0.0001 O 1 E-04 0.0002 0.0141421 ASSET B Outcome rir Prob (P.) Return () E(Return) o (n-r)? (ri-r)?P, Pessimistic Most Likely Optimistic 0.25 0.5 0.25 0.06 0.2 0.34 6 E(Return)A = (-25)(.18)+(.50)(-20)+(25) (.22)=.20 or 20% E(Return) = 1. Calculate the standard deviation of asset B