you have concluded that the following relationships are possible next year: economic status         probability      rate of return weak economy              .15                    -5% static economy              .6                         5% strong economy            .25                      15%   What is the standard deviation of the rate of return for the one year period? a. .65 % b. 1.45% c. 4% d. 6.25% e. 6.4%

Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter14: Valuation: Market-based Approach
Section: Chapter Questions
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you have concluded that the following relationships are possible next year:

economic status         probability      rate of return

weak economy              .15                    -5%

static economy              .6                         5%

strong economy            .25                      15%

 

What is the standard deviation of the rate of return for the one year period?

a. .65 %

b. 1.45%

c. 4%

d. 6.25%

e. 6.4%

 

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