Condition economy Strong Normal Weak Company A Company B of Probability % Return if this return if demand occurs demand occurs 0.25 0.5 0.25 90% 10% -50% 30% 12% 6% this Total 1.0 a. Compute the expected return and standard deviation for each of the companies above. b. Rough plot the probability distribution in graph. From the graph, can you tell which investment is more desirable?
Condition economy Strong Normal Weak Company A Company B of Probability % Return if this return if demand occurs demand occurs 0.25 0.5 0.25 90% 10% -50% 30% 12% 6% this Total 1.0 a. Compute the expected return and standard deviation for each of the companies above. b. Rough plot the probability distribution in graph. From the graph, can you tell which investment is more desirable?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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am. 124.
Transcribed Image Text:Condition
economy
Strong
Normal
Weak
Company A
Company B
of Probability % Return if this return if this
demand occurs
demand occurs
0.25
0.5
0.25
90%
10%
-50%
30%
12%
6%
Total 1.0
a. Compute the expected return and standard deviation for each of the companies above.
b. Rough plot the probability distribution in graph. From the graph, can you tell which
investment is more desirable?
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