Expected retun A stock\'s returns have the following distribution: Demand for th

Question

Expected retun A stock's returns have the following distribution: Demand for the Company's Products Weak Below average Average Above average Strong Probability of This Demand Occurring 0.1 0.3 0.3 0.1 0.2 1.0 Rate of Return If This Demand Occurs 20% -10 14 39 62 a. Calculate the stock's expected return. Round your answer to two decimal places. b. Calculate the stock's standard deviation. Round your answer to two decimal places c. Calculate the stock's coefficient of variation. Round your answer to two decimal places.

Explanation / Answer

a) The correct answer is 15.50%

b) The correct answer is 28.45%

c) The correct answer is 1.84

Notes :

= 28.45 / 15.50

= 1.84

Probability Stock A Expected Return ( Probability * Expected Return) Weak 0.10 (0.20) -0.0200 Below Average 0.30 (0.10) -0.0300 Average 0.30 0.14 0.0420 Above Average 0.10 0.39 0.0390 Strong 0.20 0.62 0.1240 Expected Return   0.1550 Expected Return   % 15.50

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