Kurt's Adventures, Inc. stock is quite cyclical. In a boom economy, the stock is expected to return 30% in comparison to 12% in a normal economy and a negative 20% in a recessionary period. The probability of a recession is 15%. There is a 30% chance of a boom economy. The remainder of the time the economy will be at normal levels. What is the standard deviation of the returns on Kurt's Adventures, Inc. stock
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Ответ:
15.83%
Explanation:
Calculation to determine is the standard deviation of the returns on Kurt’s Adventures, Inc. stock
First step is to determine l E(r)
E(r) = (.30 *.30) + (.55 *.12) + (.15 *-.20)
E(r)= .09 + .066 -.03
E(r)= .126
Second step is to determine Var
Var = .30 *(.30 -.126)^2 + .55 *(.12 -.126)^2 + .15 *(-.20 -.126)
Var=0090828 +.0000198 + .0159414
Var= .025044
Now let determine the Std dev
Std dev = √.025044 = .15825
Std dev= 15.83 percent
Therefore the standard deviation of the returns on Kurt’s Adventures, Inc. stock.is 15.83 percent
Ответ:
the answer is 10.2 .
Step-by-step explanation:
You divide 102 by 5 which gets you 20.4
You then need to divide 20.4 by 2 since there are 2 sides
And so your answer is 10.2