I need help with #25-27 please I don’t understand how to do this

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Ответ:

ayoismeisalex

11.02.2020

Mathematics

Step-by-step explanation:

$\text{Investment's Expected Return} = (0.20 \times -0.04) + (0.50 \times 0.04) + (0.10 \times 0.07) + (0.20 \times 0.08) \\ \\ = (-0.008)+(0.02)+(0.007) + (0.016) \\ \\ \text{= 0.035}\\ \\ = 3.50\%}$

$Var (r) = [(-0.04- 0.035)^2 * 0.2] + [(0.04 - 0.035)^2 * 0.5] + [(0.07 - 0.035)^2 * -0.10] + [(0.08 - 0.035)^2 * 0.20] \\ \\ = (-5*10^{-6} )+(1.25*10^{-5})+(-1.225*10^{-4}) + (4.05 \times 10^{-4}) \\ \\= 0.001665$

$SD= \sqrt{Var} = \sqrt{0.001665}= 0.0408 \\ \\ =\mathbf{0.04 \ to \ 2 \ d.p}$

$\text{B) no. B.J. Gautney Enterprises should not invest in this investment because the} \\ \\ \text{return is lower than the treasury bill and the level of risk higher than the treasury bill.}$

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