The economy of Pakistan is experiencing lots of fluctuations during the new government. Following information is extracted from a well-known company. State of pakistan economy probability rate of return Depression 10 10.5% Recession 25 5.9% Normal 45 13% Boom 20 21.1% You are required to calculate the following What will be the expected return? Calculate the variance of the above data. Calculate the standard deviation.
The economy of Pakistan is experiencing lots of fluctuations during the new government. Following information is extracted from a well-known company. State of pakistan economy probability rate of return Depression 10 10.5% Recession 25 5.9% Normal 45 13% Boom 20 21.1% You are required to calculate the following What will be the expected return? Calculate the variance of the above data. Calculate the standard deviation.
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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Question
The economy of Pakistan is experiencing lots of fluctuations during the new government. Following information is extracted from a well-known company.
| State of pakistan economy | probability | |
| Depression | 10 | 10.5% |
| Recession | 25 | 5.9% |
| Normal | 45 | 13% |
| Boom | 20 | 21.1% |
You are required to calculate the following
What will be the expected return?
Calculate the variance of the above data.
Calculate the standard deviation.
Expert Solution
Step 1
Expected rate of return, variance and standard deviation of a company under various economy is calculated using the below formula:
Step 2
Expected Return,variance and standard deviation is calculated as below;
Excel Workings:
Result:
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