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Expected Return, Variance, Std. Deviation and Cofficient of Variation:

Magee Inc.'s manager believes that economic conditions during the next year will be strong, normal, or weak, and she thinks that the firm's returns will have the probability distribution shown below. What's the standard deviation of the estimated returns?

  • State of the Economy Probability of State Occurring Stock's Expected Return
  • Boom 25% 22.20%
  • Normal 50% 14.10%
  • Recession 25% -11.90%

Basic Finance, Finance

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