Problem:
A company is faced with a 20 percent chance of a poor economy, a 40 percent chance of an average economy, and a 40 percent chance of an above-average economy. The company would expect only a 10 percent return in a poor economy, an 18 percent return in an average economy, and a 30 percent return in an above-average economy.
Required:
Question 1: What would the expected return be for this company? Please provide step by step solution and show all work.
Question 2: What would the standard deviation be for this company? Please provide step by step solution and show all work.