Problem1.In answering the following problems, it is given that the probable investment has the following range of probable outcomes and probabilities: 15% probability of a -20% return, 20% probability of a 10% return, 30% probability of a 20% return, 20% probability of a 40%, and 15% probability of a 70% return.
(a) Compute the weighted mean of the probability distribution;
(b) find out the variance of the probability distribution;
(c) find out the standard deviation of the probability distribution.
(d) find out the coefficient of variation of the probability distribution.
(e) Would another investment having a coefficient of variation of 0.25 have less risk per unit of expected return?