Question
In: Finance
Bird Corporation has a 0.1 probability of a return of -0.23, a 0.1 probability of a...
Bird Corporation has a 0.1 probability of a return of -0.23, a 0.1 probability of a rate of return of 0.07, and the remaining probability of a -0.10 rate of return. What is the variance in the expected rate of return of Bird Corporation?
Solutions
Expert Solution
| Probability (P) | Return | P*Return | Deviation form expected return (D) | PD^2 |
| 0.10 | (0.23) | (0.023) | (0.1340) | 0.0018 |
| 0.10 | 0.07 | 0.007 | 0.1660 | 0.0028 |
| 0.80 | (0.10) | (0.080) | (0.0040) | 0.0000 |
Expected Return = 
P*Return
= -.023+.007-.080
= -0.096
= -9.6%
Variance = PD^2
= .0018+.0028+0
= 0.0046
jeff jeffy answered 1 year agoRelated Solutions
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