Use the information from this table to find the standard deviation for each asset.   State of Economy Probability of State Return on Asset J Return on Asset K Boom 30% 5% 24% Growth 40% 5% 12% Stagnant 20% 5% 4% Recession 10% 5% -10%

Essentials Of Investments
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Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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Use the information from this table to find the standard deviation for each asset.

 

State of Economy

Probability of State

Return on

Asset J

Return on

Asset K

Boom

30%

5%

24%

Growth

40%

5%

12%

Stagnant

20%

5%

4%

Recession

10%

5%

-10%

Expert Solution
Step 1

A statistical measure that represents the variation in the return on the stock is term as the standard deviation. It is the square root of the covariance and can be calculated by multiplying the mean by the coefficient of variation.

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