What is the expected rate of return and risk? Potts Enterprises is evaluating a

Question

What is the expected rate of return and risk? Potts Enterprises is evaluating a security. One-year Treasury bills are currently paying 2.9 percent. Calculate the following investment’s expected return and its standard deviation. Should Potts invest in this security?
Probability | Return 0.15 -3% 0.3 2% 0.4 4% 0.15. 6% What is the expected rate of return and risk? Potts Enterprises is evaluating a security. One-year Treasury bills are currently paying 2.9 percent. Calculate the following investment’s expected return and its standard deviation. Should Potts invest in this security?
Probability | Return 0.15 -3% 0.3 2% 0.4 4% 0.15. 6%
Probability | Return 0.15 -3% 0.3 2% 0.4 4% 0.15. 6%

Explanation / Answer

robality

Return

Potts should not invest in this security because it is giving less expected return than T-bills.

Expected rate of return is the return on investing any security by taking care of all possibilities.

Risk is measure by the standard deviation it is mainly the adverse situation arises while investing in securities.  

robality

Return

0.15 -3% 0.3 2% 0.4 4% 0.15 6% Expected return 2.65% standard deviation 2.71%

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