Suppose that a security costs $3,000 today and pays off some amount b in one yea

Question

Suppose that a security costs $3,000 today and
pays off some amount b in one year. Suppose that
b is uncertain according to the following table of
probabilities:
b: $3,000 $3,300 $3,600 $3,900 $4,200
Probability: 0.1 0.2 0.3 0.2 0.2
a Calculate the return (in percent) for each value
of b. (Note: You may just calculate the total
return and not worry about how this is split
between current yield and capital-gains yield.)
b Calculate the expected return (in percent).
c Calculate the standard deviation of the return.
d Suppose that an investor has a choice between
buying this security or purchasing a different
security that also costs $3,000 today but
pays off $3,300 with certainty in one year.
How is an investor

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