(Expected return and risk) ... Universal Corporation is planning to invest in a security that has several possible rates of return. Given the probability distribution of returns:

PROBABILITY RETURN

0.05 -10%

0.15 10%

0.25 15%

0.55 25%

What is the expected rate of return on the investment?

Also compute the standard deviation of the returns.

What do the resulting numbers represent?

A) The expected rate of return on the investment is ___ %.

B) The standard deviation of the return is ___%.

C) What is the:

• Expected return of ____%?
• With a possibility %____ That the return would vary up or down by _____ %?