Question
You estimate that with probability 0.2, the return on an investment opportunity is 30% (i.e., each $1 investment generates $1.3 gross profit); with probability
You estimate that with probability 0.2, the return on an investment opportunity is 30% (i.e., each $1 investment generates $1.3 gross profit); with probability 0.5, the return is 10%; with the remaining probability, the return is -20%. Suppose you invest $10. What is the standard deviation of your gross profit?
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