Long description
State of the World |
Rate of Return |
Chance or Probability |
|
Step 2 |
Step 3 |
A |
B |
C |
D= B*C |
E = [B - E(R)] squared |
F= E * C |
1 |
−0.10 |
0.1 |
−0.01 |
0.0625 |
0.00625 |
3 |
0.05 |
0.2 |
0.01 |
0.01 |
0.002 |
4 |
0.15 |
0.4 |
0.06 |
0 |
0 |
4 |
0.25 |
0.2 |
0.05 |
0.01 |
0.002 |
5 |
0.4 |
0.1 |
0.04 |
0.0625 |
0.00625 |
Step 1: Expected Return, E(r) equals |
0.15 |
|
|
||
Step 4: Variance = |
0.0165 |
||||
Step 5: Standard Deviation= |
0.1285 |
||||
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