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# The annual returns, in percentages, on stocks A and B for three possible states of the economy are given in the table below. Economy State: Good,...

The annual returns, in percentages, on stocks A and B for three possible states of the economy are given in the table below.

Economy State: Good, Probability: 0.5, Stock A: 40 Stock B: 20

Economy State: Average, Probability: 0.3, Stock A: 20 Stock B: 40

Economy State: Bad, Probability: 0.2, Stock A: 10 Stock B: 8

Question: If one invested in StockA, what would be the standard deviation of the percentage return? Place your answer, in percent rounded to 1 decimal place, in the blank. For example, a standard deviation of 10.39 percent would be reported as 10.4. Do not use a percent sign.

Calculation of Standard Deviation in percentage return for Stock A Economy
State
Good
Average
(x)
40
20
10 (y-x) (y-x)² -16.67 277.88
3.33
11.08
13.37 177.68 Probability
(f)
0.5
0.3...

## This question was asked on Dec 25, 2010 and answered on Dec 26, 2010.

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