Consider the following returns and states of the economy for TZ.Com.:EconomyProbabilityReturn2%Weak40%Normal 50%8%Strong 10%15%What is the standard deviation of TZ's returns?4.05%4.85%4.49%4.99%4.60%

Expected Return = Probability * Return

Answered: Consider the following returns and…

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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Consider the following returns and states of the economy for TZ.Com.: Economy Probability Return Weak 40% 1% Normal 50% 8% Strong 10% 39% What is the standard deviation of TZ's returns? SET YOUR CALCULATOR TO FOUR DECIMAL PLACES AND ROUND TO 2 DECIMAL PLACES AT THE END. DO NOT ENTER THE %. FOR EXAMPLE, IF YOUR ANSWER IS 7.70% ENTER IT AS 7.70.
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Security Returns if State Occurs State of Economy Bust Boom Probability of State of Economy Roll Ross .40 .60 -10% 28 21% 8 Calculate the expected returns for Roll and Ross by filling in the following table (A negative value should be indicated by a minu sign. Do not round intermediate calculations. Calculate the product using the decimal value of the probability and the percen value of the return. Input all of your answers as a percent rounded to 2 decimal places.) Roll Ross State of Economy Probability of State of Economy Return If State Occurs Product Return If State Occurs Product Bust .40 -10% % 21 % % Boom 60 28 % % E(R) = 12.80 % 8% E(R)= % 13.20 %
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Consider the following returns and states of the economy for TZ.Com.: EconomyProbabilityReturn 2% Weak 40% Normal 50% 8% Strong 10% 15% What is the standard deviation of TZ's returns? 4.05% 4.85% 4.49% 4.99% 4.60%