Question 13

Sarah 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		Return
Boom		0.2		25.00%
Good		0.2		15.00%
Level		0.2		10.00%
Slump		0.4		-5.00%

Use the table of returns and probabilities above to determine the expected return on Sarahs investment? (Round answer to 3 decimal places, e.g. 0.076.)

Expected return

Use the table of returns and probabilities above to determine the standard deviation of the return on Sarah's investment? (Round answer to 5 decimal places, e.g. 0.07680.)

Standard deviation

I need to know the expected return and standard deviation.