|
|
Security Returns
If State Occurs |
| State of |
Probability of |
|
| Economy |
State of Economy |
Roll |
Ross |
| Bust |
.40 |
-10 |
% |
21 |
% |
| Boom |
.60 |
28 |
|
8 |
|
|
Calculate the standard deviations for Roll and Ross by filling in the following table (verify your answer using returns expressed in percentages as well as decimals):
(Negative values should be indicated by a minus sign. Do not round intermediate calculations. Round your Standard deviation answers to 2 decimal places and other answers to 4 decimal places. Omit the "%" sign in your response.)
State
of Economy |
Probability of
State of Economy |
Return Deviation
from Expected Return |
Squared Return
Deviation |
Product |
| Roll |
|
|
|
|
| Bust |
.40 |
|
|
|
|
| Boom |
.60 |
|
|
|
|
| |
|
|
|
|
|
|
|
s2 = |
|
| |
|
|
|
|
| Ross |
|
|
|
|
| Bust |
.40 |
|
|
|
|
| Boom |
.60 |
|
|
|
|
| |
|
|
|
|
|
|
|
s2 = |
|
| |
|
|
|
|
|
|
Standard Deviations |
| Roll |
% |
| Ross |
% |
|