Question
There are three assets to be considered: stocks, bonds, and commodities. The current prices of these assets are listed below: Asset Current Price Stocks $500
There are three assets to be considered: stocks, bonds, and commodities. The current prices of these assets are listed below:
Asset | Current Price |
Stocks | $500 |
Bonds | $1000 |
Commodities | $200 |
The following table lists the possible prices of these assets a year from today, with the corresponding probabilities.
Stocks | Bonds | Commodities | |||
Probability | Price | Probability | Price | Probability | Price |
0.25 | $700 | 0.4 | $1100 | 0.2 | $250 |
0.25 | $650 | 0.6 | $1050 | 0.25 | $240 |
0.25 | $600 | 0.25 | $230 | ||
0.25 | $550 | 0.3 | $220 |
1.)What is the standard deviation of the rate of return (in %) of stocks? Round your answer to at least 2 decimal places.
2.)What is the standard deviation of the rate of return (in %) of bonds? Round your answer to at least 2 decimal places.
3.)What is the standard deviation of the rate of return (in %) of commodities? Round your answer to at least 2 decimal places.
4.)which one is better by risk?
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