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What is the expected standard deviation of stock A’s returns based on the information presented in...

What is the expected standard deviation of stock A’s returns based on the information presented in the table? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098. Note that figures in the table are presented in decimal format, not as percentages.

Outcome Probability of outcome Stock A return in outcome
Good 0.3 0.7
Medium 0.5 0.1
Bad ? -0.1
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Answer #1

Hello

YOUR REQUIRED ANSWER IS 31.05%

Economy Probability Returns P*R (Return - Mean)^2 * P
Good 0.3 0.7 21.000% 0.0634800
Medium 0.5 0.1 5.000% 0.0098000
Bad 0.2 -0.1 -2.000% 0.0231200
Mean 24.00% 0.09640
S.D. 31.05%

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