You are considering investing in a project with the following possible outcomes: Probability of Investment States...

You are considering investing in a project with the following possible outcomes:

     Probability of Investment
States    Occurrence Returns
State 1: Economic boom 20% 16%
State 2: Economic growth       40% 12%
State 3: Economic decline       20% 5%
State 4: Depression        20% -5%

Calculate the standard deviation of returns for this investment. Round to the nearset hundredth percent. Answer in the percent format. Do not include % sign in your answer (i.e. If your answer is 4.33%, type 4.33 without a % sign at the end.)

Solutions

Expert Solution

The standard deviation is calculated in excel below

Therefore, the standard deviation of return is 4.58

jeff jeffy answered 1 year ago

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