Find the standard deviation of the investment

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An investor plans to invest $20,000 into one of four investments.

The return on each investment depends on whether next year's economy is strong or weak. The following table summarizes the possible payoffs, in dollars, for the four investments. Let V, W, X, and Y denote the payoffs for the certificate of deposit, office complex, land speculation, and technical school, respectively. Then V, W, X, and Y are random variables. Assume that next year's economy has a 40% chance of being strong and a 60% chance of being weak. Investment Economy Certificate of Deposit Office Complex Land Speculation Technical School Strong 1,200 3,000 30,000 1,100 Weak 1,200 1,000 -15,000 2,000

Find the standard deviation of the investment with the best expected payoff?

Reference no: EM132852880

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