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Calculate the return in percent for each value

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Suppose that a security costs $3000 today and pays off some amount b in one year. suppose that b is uncertain according to the following table of probabilities.

B________$3000_____$3300__________$3600________$3900________$4200

Probability 0.1_______0.2_____________0.3__________0.2__________0.2

A. Calculate the return (in Percent) for each value of b. (note: you may just calculate the total return and not worry about how this split between current yield and capital- gains yield)

B. Calculate the expected return (in Percent)

C. Calculate the standard deviation of the return

D. Suppose that an investor has choice between buying this security or purchasing a different security that also cost $3000 today but pays off $3300 with certainty in one year. How is an investor's choice of which security to purchase related to his degree of risk aversion

Reference no: EM131143507

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