P5-5 answers - Standard Deviation 3.54% 6.69% Hence both...

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should provide benefits over a 10-year period, and each requires an initial investment of $4,000. Manage constructed the table (on page 266) of estimates of rates of return and probabilities for pessimistic, most optimistic results. Solution:- Camera R Camera S amount probability amount probability Initial investment $4,000 1.00 $4,000 1.00 Annual rate of return >pessimistic 20% 0.25 15% 0.20 >most likely 25% 0.50 25% 0.55 >optomistic 30% 0.25 35% 0.25 Solution: - Computation of the Range Range 10% 20% Hence the Range is 10% 20% Solution: - Computation of the Expected value of Return for each stock Expected Value 25.00% 25.50% Hence the Expected rate of return is 25.00% 25.50% Solution:- Computation of the Standard Deviation
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Unformatted text preview: Standard Deviation 3.54% 6.69% Hence both the range and standard deviation of return for the S is higher,so stock S is more riski P5-5 Risk and probability Micro-Pub, Inc., is considering the purchase of one of two microfilm cameras a. Determine the range for the rate of return for each of the two cameras. b. Determine the expected value of return for each camera. c. Purchase of which camera is riskier? Why a. Determine the range for the rate of return for each of the two cameras. b. Determine the expected value of return for each camera. c. Purchase of which camera is riskier? Why ement has likely, and ier. s, R and S. Both...
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P5-5 answers - Standard Deviation 3.54% 6.69% Hence both...

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