Question 25

1. An analyst developed the following probability distribution of the rate of return for a common stock:

   Scenario Probability Rate of return

   Recession 0.20 -0.05

   Normal 0.60 0.10

   Boom 0.20 0.25

   The standard deviation of the rate of return is closest to:

   	1.	0.0849
   	2.	0.0949
   	3.	0.0649
   	4.	0.0745
   	5.	0.0875