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Security Returns If State Occurs State of Probability of Economy State of Economy Roll Ross Bust .30 -10 % 14 % Boom .70 21 5
Security Returns If State Occurs | |||||||||||
State of | Probability of | ||||||||||
Economy | State of Economy | Roll | Ross | ||||||||
Bust | .30 | -10 | % | 14 | % | ||||||
Boom | .70 | 21 | 5 | ||||||||
Calculate the standard deviations for Roll and Ross by filling in the following table (verify your answer using returns expressed in percentages as well as decimals): (Negative amounts should be indicated by a minus sign. Round your Economy and Standard deviation answers to 2 decimal and other answers to 4 decimal places. Omit the "%" sign in your response.) |
State of Economy | Probability of State of Economy | Return Deviation from Expected Return | Squared Return Deviation | Product | |||||||
Roll | |||||||||||
Bust | |||||||||||
Boom | |||||||||||
2 = | |||||||||||
Ross | |||||||||||
Bust | |||||||||||
Boom | |||||||||||
2 = | |||||||||||
Standard deviations | |
Roll | % |
Ross | % |
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