An analyst developed the following probability distribution for the rate of return for a common stock. Scenario Probability Rate of Return 1 0.25 -15% 2 0.35 5% 3 0.40 10% a. Calculate the expected rate of return. (Round intermediate calculations to at least 4 decimal places.) b. Calculate the variance and the standard deviation of this probability distribution. (Round your final answer to 2 decimal places.)
Contingency Table
A contingency table can be defined as the visual representation of the relationship between two or more categorical variables that can be evaluated and registered. It is a categorical version of the scatterplot, which is used to investigate the linear relationship between two variables. A contingency table is indeed a type of frequency distribution table that displays two variables at the same time.
Binomial Distribution
Binomial is an algebraic expression of the sum or the difference of two terms. Before knowing about binomial distribution, we must know about the binomial theorem.
An analyst developed the following
| Scenario | Probability | Rate of Return | |||
| 1 | 0.25 | -15% | |||
| 2 | 0.35 | 5% | |||
| 3 | 0.40 | 10% | |||
a. Calculate the expected rate of return. (Round intermediate calculations to at least 4 decimal places.)
b. Calculate the variance and the standard deviation of this probability distribution. (Round your final answer to 2 decimal places.)
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 4 images
