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Compute the standard deviation of the expected return

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Reference no: EM132531773

You must choose between two asset purchases. The annual rate of return and related probabilities given below summarize the firm's analysis.

Asset A                                                    Asset B

rate of Return         probability        rate of Return         probability

10%                      30%                    5%                     40%

15%                      40%                         15%                   20

20%                     30%                         25%                   40

For each asset, compute

Question (a) the expected rate of return.

Question (b) the standard deviation of the expected return.

Question (c) Which asset should you select? Justify your answer

Reference no: EM132531773

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