1. Calculate the standard deviation for an investment with four possible outcomes:
10% chance of losing 5%
30% chance of gaining 15%
40% chance of gaining 25% and
20% chance of gaining 40%
Calculate the mean, variance, and standard deviation (Show your work)
2. Calculate the required rate of return on a stock that has a beta of 1.1 when the expected return on the market is 12% and the risk-free rate is 3%:
(Show your work)