Calculate the standard deviation of the return

Reference no: EM13257860

Suppose that a security costs $3000 today and pays off some amount b in one year. Suppose that be is uncertainly 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 (for each value of.b. Calculate the expected return. 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: EM13257860

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