Problem:
A stock's return has the following distribution:
Demand for the
Company's Products Probability of This
Demand Occurring Rate of Return if This
Demand Occurs (%)
Weak 0.1 -45%
Below average 0.2 -6
Average 0.4 18
Above average 0.2 40
Strong 0.1 75
1.0
I need some help with answering these questions:
- Calculate the stock's expected return. Round your answer to two decimal places.
- Calculate the standard deviation. Round your answer to two decimal places.