Expected Returns: Discrete Distribution The market and Stock J have the followin

Question

Expected Returns: Discrete Distribution

The market and Stock J have the following probability distributions:

Calculate the expected rate of return for the market. Round your answer to two decimal places.
%

Calculate the expected rate of return for Stock J. Round your answer to two decimal places.
%

Calculate the standard deviation for the market. Round your answer to two decimal places.
%

Calculate the standard deviation for Stock J. Round your answer to two decimal places.
%

Probability rM rJ 0.3 14% 21% 0.4 9 4 0.3 17 11

Explanation / Answer

the expected rate of return for the market = 12.90%

Note :

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The   expected rate of return for Stock J = 11.20%

Note :

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The  standard deviation for the market = 3.39%

Note :

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The  standard deviation for Stock J = 7.04%

Note :

Probability Rm Expected Return ( Probability * Expected Return) 0.30 0.14 0.04 0.40 0.09 0.04 0.30 0.17 0.05 Expected Return   0.129000 Expected Return   % 12.90

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