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Economics

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Feb 20, 2024

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1) Rand Corporation has a 0.3 probability of a return of 0.1, a 0.2 probability of a rate of return of 0.08, and the remaining probability of a -0.36 rate of return. What is the expected rate of return of Rand Corporation? 2) Emmons Corporation has a 0.3 probability of a return of -0.16, a 0.4 probability of a rate of return of 0.06, and the remaining probability of a -0.4 rate of return. What is the variance in the expected rate of return of Emmons Corporation? Answer in decimal places please. & Expert-verified 1.Remaining probability=1-(0.3+0.2) =05 Expected return=Respective return*Respective probability =(0.3*0.1)+(0.2*0.08)+(0.5*-0.36) =-0.134(Negative) 2.Remaining probability=1-(0.3+0.4) =03 Expected return=Respective return*Respective probability =(0.3*-0.16)+(0.4*0.06)+(0.3*-0.4) =-0.144(Negative) Probability Return Probability* (Return-Expected Return)”~2 0.3 -0.16 0.3*[-0.16-(-0.144)]72=0.0000768 (NOTE1) 0.4 0.06 0.4%[0.06-(-0.144)]72=0.0166464 0.3 -0.4 0.3*[-0.4-(-0.144)]~2=0.0196608 Total=0.036384
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