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Your boss has asked you to determine the risk (standard deviation) of a particular stock....

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Finance

Your boss has asked you to determine the risk (standard deviation) of a particular stock. You have prepared the following table to summarize your expectations about the stock given various states of the economy. The standard deviation of this stock is:

State of the economy

Probability of state

Return in state

Boom

0.3

12%

Normal

0.6

8%

Recession

0.1

4%

Select one:

a. 2.6%

b. 1.9%

c. 2.4%

d. 6.4%

e. 1.3%

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