In: Finance
Expected return and standard deviation.
Use the following information to answer the questions.
State of Economy |
Probability of State |
Return on Asset D in State |
Return on Asset E in State |
Return on Asset F in State |
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Boom |
0.34 |
0.07 |
0.29 |
0.17 |
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Normal |
0.54 |
0.07 |
0.19 |
0.13 |
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Recession |
0.12 |
0.07 |
−0.24 |
−0.05 |
a. What is the expected return of each asset?
b. What is the variance of each asset?
c. What is the standard deviation of each asset?