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Let the random variable R denote the rate of return on an asset. R has the following pdf.
R P(R=r)
.3 .05
.2 .20
.1 .20
0 .20
-.1 .15
-.2 .10
-.3 .10

a. What is the expected value and variance of R?

b. You are considering investing $150 in this asset. After 1 year, the value will be $150(1+R). What is the expected value and standard deviation of the value of your asset in 1 year?

Econometrics, Economics

  • Category:- Econometrics
  • Reference No.:- M9479998

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