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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?

Financial Accounting, Accounting

  • Category:- Financial Accounting
  • Reference No.:- M93672

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