Computaion of variance of a stock on different economy
Ripken Iron Works faces the following probability distribution:
|
State of the Economy
|
Probability of State Occurring
|
Stock's Expected Return if this State Occurs
|
|
Boom
|
0.25
|
25%
|
|
Normal
|
0.5
|
15%
|
|
Recession
|
0.25
|
5%
|
What is the coefficient of variation on the company's stock? (Assume that the standard deviation is calculated using the population statistic.)