XYZ Inc.'s manager believes that economic conditions during the next year will be strong, normal, or...

XYZ Inc.'s manager believes that economic conditions during the next year will be strong, normal, or weak, and she thinks that the firm's returns will have the probability distribution shown below. What is the expected return? What are the variance and standard deviation of the estimated returns? Show the calculations.

Economic Conditions

Probability:

Strong 30%

Normal 40%

Weak 30%

Return:

Strong 40.0%

Normal 10.0%

Weak -16.0%

Expected return, Variance, Standard deviation?

Expert Solution

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jeff jeffy answered 1 year ago

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