Variance and standard deviation (expected). Hull Consultants, a famous think tank in the Midwest, has provided...

Variance and standard deviation

(expected).

Hull Consultants, a famous think tank in the Midwest, has provided probability estimates for the four potential economic states for the coming year. The probability of a boom economy is

10 %,

the probability of a stable growth economy is

17%,

the probability of a stagnant economy is

55%,

and the probability of a recession is

18%.

Calculate the variance and the standard deviation of the three investments: stock, corporate bond, and government bond. If the estimates for both the probabilities of the economy and the returns in each state of the economy are correct, which investment would you choose, considering both risk and return?

Investment	Forecasted Returns for Each Economy
Investment	Boom	Stable Growth	Stagnant	Recession
Stock	30%	12%	3%	−10%
Corporate bond	10%	7%	6%	4%
Government bond	9%	6%	5%	3%

Hint: Make sure to round all intermediate calculations to at least seven (7) decimal places. The input instructions, phrases in parenthesis after each answer box, only apply for the answers you will type.

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jeff jeffy answered 3 months ago

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Variance and standard deviation ​(expected). Hull​ Consultants, a famous think tank in the​ Midwest, has provided...

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