In: Finance
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.)
The standard deviation is calculated in excel below
Therefore, the standard deviation of return is 4.58