Question
Expected Return, Variance, Std. Deviation and Cofficient of Variation: Magee Inc.'s manager believes that economic conditions during the next year will be strong, normal, or
Expected Return, Variance, Std. Deviation and Cofficient of Variation: Magee Inc.'s manager believes that economic conditions during the next year will be strong, normal, or weak, and she thinks that the firm's returns will have the probability distribution shown below. What's the standard deviation of the estimated returns? Round your answer to two decimal places. For example, if your answer is $345.6671 round as 345.67 and if your answer is .05718 or 5.7182% round as 5.72.
State of the Economy | Probability of State Occurring | Stock's Expected Return |
Boom | 30% | 22.95% |
Normal | 50% | 12.90% |
Recession | 20% | 8.60% |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started