DISCUSS QUESTION #1

SolarSun Corporation is evaluating asset A. The annual rate of return and probabilities associated with Asset A are as follows:

Rate of Return: 10% 13% 16%

Probability: 10% 20% 70%

REPLY POST: Question 1 1) Explain narratively what will happen to the expected return assuming the probabilities

changed to the following:

RATE OF RETURN: 10% 13% 16%

PROBABILITY: 70% 20% 10%

2) Calculate the expected return given the change above. 3) What impact will this have on the standard deviation using the new value to support your narrative explanation.