Question
The following information has been provided for the following shares: State of the Economy Probability Share A (Expected Return) Share B (Expected Return) Poor 25%
The following information has been provided for the following shares:
State of the Economy | Probability | Share A (Expected Return) | Share B (Expected Return) |
Poor | 25% | -8% | -8% |
Moderate | 25% | 4% | -1% |
Good | 25% | 8% | 5% |
Strong | 25% | 14% | 10% |
Expected Return |
| 4.5% |
|
a) Calculate the expected return of Share B. Express your answer as a decimal to four decimal places, for example if your answer is 0.98764, type 0.9876 (1 Mark)
Answer: Answer (Keep 4 decimal places)
b) Calculate the standard deviation of Share B. Express your answer as a decimal to four decimal places, for example if your answer is 0.98764, type 0.9876 (2 Marks)
Answer: Answer (Keep 4 decimal places)
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