Expected Return: Discrete Distribution A stock's return has the following distribution: Demand for the Company's Products Probability of This Demand...

80.2K

Verified Solution

Question

Finance

Expected Return: Discrete Distribution
A stock's return has the following distribution:
Demand for the
Company's Products Probability of This
Demand Occurring Rate of Return if This
Demand Occurs (%)
Weak 0.1 -35 %
Below average 0.2 -5
Average 0.4 18
Above average 0.2 30
Strong 0.1 70
1.0
Calculate the stock’s expected return and standard deviation. Donot round intermediate calculations. Round your answers to twodecimal places.
Expected return: %
Standard deviation: %

Answer & Explanation Solved by verified expert

4.4 Ratings (811 Votes)

StateProbability PReturnPReturnDeviation form expected See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

Expected Return: Discrete DistributionA stock's return has the following distribution:Demand for theCompany's ProductsProbability of ThisDemand OccurringRate of Return if ThisDemand Occurs (%)Weak0.1-35%Below average0.2-5Average0.418Above average0.230Strong0.1701.0Calculate the stock’s expected return and standard deviation. Donot round intermediate calculations. Round your answers to twodecimal places.Expected return: %Standard deviation: %

Demand for the Company's Products	Probability of This Demand Occurring		Rate of Return if This Demand Occurs (%)
Weak		0.1	-35	%
Below average		0.2	-5
Average		0.4	18
Above average		0.2	30
Strong		0.1	70
		1.0