Question
Maria is considering investing in a company's stock and is aware that the return on that investment is particularly sensitive to how the economy is
Maria is considering investing in a company's stock and is aware that the return on that investment is particularly sensitive to how the economy is performing. Her analysis suggests that four states of the economy can affect the return on the investment.
Probability: Boom 0.2 Good 0.3 Level 0.1 Slump 0.4
Return 25.00% 15.00% 10.00% -5.00%
Use the table of returns and probabilities above to determine the expected return on Marias investment? (Round answer to 3 decimal places, e.g. 0.076.)
Use the table of returns and probabilities above to determine the standard deviation of the return on Maria's investment? (Round answer to 5 decimal places, e.g. 0.07680.)
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