Consider the following information about Stock A: Economic State Probability Return Recession 25% -10% Normal 35% 15% Expansion 40% 25% Calculate the expected return, the variance, standard deviation, and coefficient of variation for this stock. Interpret your answers.
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.
2A) Consider the following information about Stock A:
|
Economic State |
Probability |
Return |
|
Recession |
25% |
-10% |
|
Normal |
35% |
15% |
|
Expansion |
40% |
25% |
Calculate the expected return, the variance, standard deviation, and coefficient of variation for this stock. Interpret your answers.
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