Question

In: Finance

2. You have been given this probability distribution of the holding period return for KMP stock:...

2. You have been given this probability distribution of the holding period return for KMP stock: State Probability Return 1 30% 20% 2 60% 12% 3 10% -5% What are the expected return and standard deviation for KMP stock?

Solutions

Expert Solution

calculations-

Expected Return = Sum of( Holding period returns*probability)
Standard deviation= sqrt(Variance)

Variance = Sum of ((Holding period return -Expected return)^2*probability)

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