please explain on how to do these.

Consider the following probability distribution of returns estimated for a proposed project that

involves a new ultrasound machine:

a$.$ What is the expected rate of return on the project?

b$.$ What is the project's standard deviation of returns?

c$.$ What is the project's coefficient of variation $($CV$)$ of returns?

d$.$ What type of risk does the standard deviation and CV measure?

e$.$ In what situation is this risk relevant?

ANSWER

a$.$

Expected rate of return:

$E(R)=$

b$.$

The standard deviation is found as follows:

Variance $=$

Standard Deviation $=$

c$.$

$CV=$