Quantitative Problem: You are given the following probability distribution for C
ID: 2785217 • Letter: Q
Question
Quantitative Problem: You are given the following probability distribution for CHC Enterprises:
What is the stock's expected return? Round your answer to 2 decimal places. Do not round intermediate calculations.
%
What is the stock's standard deviation? Round your answer to two decimal places. Do not round intermediate calculations.
%
What is the stock's coefficient of variation? Round your answer to two decimal places. Do not round intermediate calculations.
State of Economy Probability Rate of return Strong 0.25 21% Normal 0.45 9% Weak 0.3 -4%Explanation / Answer
Expected return=Respective returns*Respective probabilities
=(0.25*21)+(0.45*9)+(0.3*-4)=8.1%
SD=[Total of Probability(return-mean)^2/Total probability]^(1/2)
=9.27%(Approx)
CV=SD/Mean
=(9.27/8.1)=1.14(Approx).
Probability Return Probability*(Return-mean)^2 0.25 21 0.25*(21-8.1)^2=41.6025 0.45 9 0.45*(9-8.1)^2=0.3645 0.3 -4 0.3*(-4-8.1)^2=43.923 Total=85.89%