Let the random variable R denote the rate of return on an asset. R has the following pdf.
R P(R=r)
.3 .1
.2 .1
.1 .15
0 .15
-.1 .20
-.2 .25
-.3 .05
a. What is the expected value and variance of R?
b. You are considering investing $100 in this asset. After 1 year, the value will be $100(1+R). What is the expected value and standard deviation of the value of your asset in 1 year?