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Based on the following information, what is the standard deviation of returns? State of Economy Probability of State of Economy Rate of Return if State Occurs Recession .22 − .112 Normal .25 .127 Boom .53 .237

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fortuneonyemuwa

Answer:

Step-by-step explanation:

Mean = 0.53*23.7% + 0.25*12.7% + 0.22*(-0.112)= 15.71%

standard deviation= sqrt(0.53*(23.7%-15.71%)^2 + 0.25*(12.7%-15.71%)^2 + 0.22*(-0.112-12.40%)^2)= 8.40%

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