Question
The expected return for an index fund is determined by how country A succeeds in concluding a trade agreement with the outside world. If the
The expected return for an index fund is determined by how country A succeeds in concluding a trade agreement with the outside world. If the country succeeds in reaching an agreement that spans the entire economy, it is believed that companies will prosper and thus the fund's return will be large. If you completely fail to agree, all the country's companies will find it difficult to trade with the outside world and consequently the fund's return will be low.
Outcome Probability Return in percent
Full agreement 0.46 10.18
Limited agreement 0.18 7.18
No agreement 0.36 2.93
Tthe information above shows the probabilities of the different outcomes as well as the different outcomes achieved. Calculate the variance of the return.
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