Calculate the expected return and standard deviation

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Question - a. The following historical time series of data on a security returns is available from 2016 to 2020:

Year

Return on a Security, %

2016

35

2017

20

2018

15

2019

18

2020

-8

Required - Calculate the expected return and standard deviation of the returns from the above discreate distribution.

b. An analyst predicts the following possibilities on a security returns next year:

State

Probability

Return on a Security, %

Boom

0.20

30

Good

0.60

12.5

Crash

0.20

-12.5

Required - Calculate the expected return and standard deviation of the returns from the above probability distribution the security of:

1. Expected Return:

2. Variance:

3. Standard Deviation:

Reference no: EM133166985

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