Question
Expected Return : A stocks return have the following distribution: Demand for the Companys Products Probability of This Demand Occurring Rate of Return if This
Expected Return: A stocks return have the following distribution:
Demand for the Companys Products | Probability of This Demand Occurring | Rate of Return if This Demand Occurs |
Weak | 0.1 | (30%) |
Below Average | 0.1 | (14) |
Average | 0.3 | 11 |
Above Average | 0.3 | 20 |
Strong | 0.2 | 45 |
1.0
Calculate the stocks expected return, standard deviation, and coefficient of variation.
Stocks Expected Return:
0.1 * -30% + 0.1 * -14% + 0.3 * 11% + 0.3 * 20% + 0.2 * 45%
0.1 * -.3 + 0.1 * -.14 + 0.3 * .11 + 0.3 * .2 + 0.2 * .45
-.03 + -.014 + .033 + .06 + .09 = .139 * 100 = 13.9%
The stock's expected return is 13.9%, the standard deviation is 21.86%, and the coefficient of variation is 1.57. I need help in finding the standard deviation and coefficient of variation. Please show the formula that you use for both standard deviation and coefficient of variation and show your work step by step in detail. It will help me understand where I went wrong. Thank you.
Note: Please don't use tables
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