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You are considering investing in a project with the following possible out comes: Probability of Investment States Occurrence Returns State 1: Economic boom 18% 20%
You are considering investing in a project with the following possible out comes: Probability of Investment States Occurrence Returns State 1: Economic boom 18% 20% State 2: Economic growth 42% 16% State 3: Economic decline 30% 3% State 4: Depression 10% -25% Final Examination 13 Introduction to Financial Management Calculate the expected rate of return and standard deviation of returns for this investment, respectively. a. 2.18%, 1.69% b. 8.72%, 12.99% c. 7.35%, 12.99% d. 3.50%, 1.69%
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