Homework: Unit 5 Homework Sav Score: 0 of 2 pts 90110 (8 complete) HW Score: 60%

Question

Homework: Unit 5 Homework Sav Score: 0 of 2 pts 90110 (8 complete) HW Score: 60%, 12 of 20 p P 10-1 (similar to) Question Help | shows the one-year return distribution for RCS stock Calculate The figure in the popup window, a. The expected return b. The standard deviation of the return. Note: Make sure to round all intermediate calculations to at least five decimal places a. The expected return The expected return is (Round to two decimal places) Graph/chart 35 30- 25- 2H : 1-. Enter your answer in the answer box and then click C -25% return 8-20% return C 0% return D 20% return E 25% return remaining

Explanation / Answer

Expected Returns = Sum of p(x)*X = 0.1 x -25% + 0.2 x -20% +... + 0.3 x 25% = 6.00%

Standard Deviation = Square root (Sum of p(x)*(X - M)^2) = [0.1 x (-25% - 6%)^2 + 0.2 x (-20% - 6%)^2 + ... + 0.3 x (25% - 6%)^2]^(1/2) = 19.85%

X p(x) p(x)*X p(x)*(X-M)^2 -25% 0.1 -0.025 0.0096 -20% 0.2 -0.04 0.0135 0% 0.15 0 0.0005 20% 0.25 0.05 0.0049 25% 0.3 0.075 0.0108 M 6.00% 0.0394 STD 19.85%

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