Question
Elizabeth is considering investing in a company's stock and is aware that the return on that investment is particularly sensitive to how the economy is
Elizabeth is considering investing in a company's stock and is aware that the return on that investment is particularly sensitive to how the economy is performing. Her analysis suggests that four states of the economy can affect the return on the investment.
Probability | Return | ||||
Boom | 0.2 | 25.00% | |||
Good | 0.2 | 15.00% | |||
Level | 0.4 | 10.00% | |||
Slump | 0.2 | -5.00% |
Use the table of returns and probabilities above to determine the expected return on Elizabeths investment? (Round answer to 3 decimal places, e.g. 0.076.)
Expected return |
Use the table of returns and probabilities above to determine the standard deviation of the return on Elizabeth's investment? (Round answer to 5 decimal places, e.g. 0.07680.)
Standard deviation |
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