Calculate the standard deviation

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Robert Gage is considering whether to invest in a newly formed investment fund. The fund’s investment objective is to acquire home mortgage securities at what it hopes will be bargain prices. The fund sponsor has suggested to Robert that the fund’s performance will hinge on how the national economy performs in the coming year. Specifically, he suggested the following possible outcomes: Economy Probability Fund Return Expansion 5% 100% Growth 45% 35% Recession 45% 5% Depression 5% –100% • Based on these potential outcomes, what is your estimate of the expected rate of return from this investment opportunity? Calculate the standard deviation.

Reference no: EM131994360

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