Question 8

Use the following information for questions 8 to 10.

You are given the following probability distribution.

Economy Growth State Probability P_i Cash Flow X_i

Weak 0.2 2,000

Moderate 0.4 6,000

Normal 0.3 10,000

High 0.1 15,000

What is the expected value of the cash flows?

A.2,600

B.7,300

C.6,100

D.4,700

E.3,590

F.5,990

Question 9

What is the variance of the cash flows?

A.24,600,000

B.27,177,300

C.15,555,990

D.19,666,100

E.14,410,000

F.18,460,700

Question 10

What is the coefficient of variation of the cash flows?

A.1.10

B.1.30

C.0.52

D.0.18

E.2.03

F.1.23