Investment Expected Annual SD of Annual Variance of Long-Run Outcome Green Red White Pink % Change % Change Annual % Change Return 1 0.8 0.05 0.95 0.50 0.7 Green 8.3% 20% 4% 6% 2 0.9 0.2 1 0.60 0.8 -17% 3 1.1 1 1 Red 71% 132% 176% 1.00 0.9 0.8% 4% 0.2% 0.7% 4 1.1 3 1 2.00 1.1 White Pink 44% 5 1.2 3 2.00 1.2 36% 66% 14% 1 6 1.4 3 1.1 2.05 1.5 Gross Returns 1.083 1.708333 1.008 1.36 1.03333333 Expected Annual % Change 8.3% 71% 0.8% 36% 36% Another way: 0.5*Mean(red)+0.5*Mean(white) 3.3% Variance of Annual % Change 0.0381 176% 0.2% 44% 44% Another way: 0.5^2*Variance(red)+0.5^2*Variance(white) 0.0722 Standard Deviation of % Annual Change 20% 132% 4% 66% 27% Note: There are some differences between the results in this table and those in the case due to rounding