Question1 barbara is considering investing in a stock and

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Question:

1. Barbara is considering investing in a stock and is aware that the return on that investment is particularly sensitive to how the economy is performing. Her analysis suggests that 4 states of the economy can affect the return on the investment. Using the table of returns and probabilities below, Evaluate

Probability          Return

Boom    0.3          25.00%

Good     0.3          15.00%

Level     0.2          10.00%

Slump   0.2          -5.00%

a. Determine the expected return on Barbara's investment?

b. What is the standard deviation of the return on Barbara's investment?

Reference no: EM13348672

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