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Unformatted text preview: Mean = ( .08 + .12 + .04) / 3 = .0533 Variance = (.08  .0533)"2 + (.12  .0533)"2 = (.04  .0533)"2/ (3  1)= .00693 Standard deviation = .00693 " .5 = .0833 Probability: a 3% loss (return of 3%) lies one standard deviation below the mean. There is 16% ofthe probability falling below that point (68% falls between 3% and 13.66%, so 16% lies below 3% and 16% lies above 13.66%). 10.30...
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 Fall '08
 WHITE
 Corporate Finance

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