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venture investor, BKAngel, is considering investing in a software venture opportunity. However, the rate of return to be realized next year is likely to vary
venture investor, BKAngel, is considering investing in a software venture opportunity.
However, the rate of return to be realized next year is likely to vary with the economic climate
that actually occurs. Following are three possible economic outcomes, the probability that
each one will occur, and the rate of return projected for each outcome:
Economic state Probability of occurrence Rate of return
Recession
Normal
Rapid growth
A What is the expected rate of return on the software venture?
B Calculate the variance and standard deviation of the rates of return for the software
venture?
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