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Take a Test -Oshayne Whittingham-Google Chrome Secure https://www.mathxlcon/Student PlayerTest.aspx?testid.172873572&centennyes; Principles of Business Financene Whittingham Test:Exam 2 Time Remaining: 02:43:40 Subr This Question: 1 pt 40 of 41 (7 complete) This Test: 41 pts p You are considering investing in a firm that has the following possible outcomes Economic boom probability of 25%, return of 25% Economic growth probability of 60%, return of 15% Economic decline probability of 15%, return of-5% What is the standard deviation of returns on the investment? O A. 9.21 B. 1247% °C, 8475% D. 1528%

Explanation / Answer

State Probability (P) Returns(X ) (P * X ) P * (X -Average Return of X)^2 Economic Boom 25% 25 6.25 27.5625 Economic Growth 60% 15 9 0.1500 Economic Decline 15% -5 -0.75 57.0375 Total TOTAL 14.5 84.7500 Average Return = (P * X) 14.50% VARIANCE = P * (X -Average Return of X)^2 84.7500 Standard Deviation = Square root of (P * (X -Average Return of X)^2) Square root of 84.75 9.20598 Ans 9.21

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