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  3. calculate the variance of the rate of return, var(

Calculate the Variance of the Rate of Return, Var(R) X A 0.00705 B 0.00825 x...

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Finance

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Calculate the Variance of the Rate of Return, Var(R) X A 0.00705 B 0.00825 x 0.07900 Your answer D 0.01500 E 0.02250 Table 7.2-1 Standard Deviation of Rate of Return for an Investment in Common Stock, initial investment:$10,000 State of the Economy Probability of the State of the Economy Cash Return Percentage Rate of Return Cash Return/10,000 Standard Deviation of Rate of Return Expected Rate of Return: Percentage Rate of Return Probability of the State of the Economy A Recession B 10% E (2,000) FEE/10,000 -0.2 - -2,000 + 10,000 G=BXF (-0.2) (0.1) {F-E(R)}^2 x B (-0.2 - E(R)}2 x 0.1 50% 1,000 Moderate growth 0.1 = 1,000+ 10,000 Strong growth 40% 3,000 0.3 = 3,000 + 10,000 Sum 100% E(R) Var(R)

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