Calculate the standard deviation of the return

Reference no: EM13210081

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 .1 .2 .3 .2 .2

A. Calculate the return (in percent) for each value of b.
B. Calculate the expected return (in percent).
C. Calculate the standard deviation of the return
D. Suppose that an investor has a choice between buying this security or purchasing a different security that also costs $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: EM13210081

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