In answering the following questions, it is given that the potential investment has the following range of possible outcomes and probabilities: 10% probability of a -20% return, 40% probability of a 15% return, 40% probability of a 25% return, and a 10% probability of a 50% return.;(a) Calculate the weighted mean of the probability distribution;(b) calculate the variance of the probability distribution;(c) Calculate the standard deviation of the probability distribution.;(d) Calculate the coefficient of variation of the probability distribution.;(e) Would another investment having a coefficient of variation of.25 appear to offer a higher return per unit of risk?
Solve: Expected Mean- Variance and Standard Deviation
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Dec 18, 2020EXPERT
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