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The stock market can have three potential returns with the following probabilities. Note otherwise is whatever probability it takes for all three probabilities to sum
The stock market can have three potential returns with the following probabilities. Note "otherwise" is whatever probability it takes for all three probabilities to sum to one. So, if the first two probabilities are each .30, then "otherwise" represents a probability of .40.
Probability | Return |
0.29 | -0.04 |
0.34 | 0.04 |
otherwise | 0.11 |
What is the stock market's standard deviation? Enter your answer in decimal form, and show 4 decimal places.
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