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Suppose you have a project that has a 0.9 chance of triplingyour investment in a...

Suppose you have a project that has a 0.9 chance of tripling your investment in a year and a 0.1 chance of doubling your investment in a year. What is the standard deviation of the rate of return on this investment? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places.)

Standard Deviation ______ %

Solutions

Expert Solution

Mean return = 0.9*200% + 0.1*100%

= 180% + 10%

= 190%

Variance = 0.9*(200-190)^2 + 0.1*(100-190)^2

=0.9*100 + 0.1*8100

= 90 +810

= 900%

Standard Deviation = square root (900)

= 30%

jeff jeffy answered 2 years ago
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