Probabilities and possible returns of share X have been projected as below based on different statutes of an economy. Required: a) Calculate the expected return if you buy this share. b) Calculate the variance and standard deviation.

Probabilities and possible returns of share X have been projected as below based on different statutes of an economy. Required: a) Calculate the expected return if you buy this share. b) Calculate the variance and standard deviation.

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter15: Capital Investment Analysis

Section: Chapter Questions

Problem 15.1.1MBA

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Question

Probabilities and possible returns of share X have been projected as below based on different statutes of an economy.

Required:

a) Calculate the expected return if you buy this share.

b) Calculate the variance and standard deviation.

Outcome
Probability Return
30%
30%
Recession
-13%
Expansion
8%
Boom
40%
20%

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