Question
Ginger Investments is analyzing the risk of a possible investment into a gingerbread house by producing two different scenarios: The horrible scenario: the gingerbread house
Ginger Investments is analyzing the risk of a possible investment into a gingerbread house by producing two different scenarios:
- The horrible scenario: the gingerbread house would produce a before-tax internal rate of return (BTIRR) of 5%,
- The joyful scenario: the gingerbread house would produce a BTIRR of 21%.
Ginger Investments believes that the joyful scenario has a 66% chance of occurring, and the horrible scenario has the remaining chance.
What is the standard deviation of the BTIRRs percentage returns?
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Intermediate Financial Management
Authors: Eugene F Brigham, Phillip R Daves
9th Edition
032431986X, 9780324319866
