1. Investigating a particular stock, you estimate the following returns and their associated probabilities:
Probability Return
11% 40%
21% 25%
35% 10%
13% -10%
rest -30%
What is the expected return of this asset? Enter answer in percents, accurate to two decimal places.
2. You estimate the following possible returns and their associated probabilities for an asset:
Probability Return
15% 25%
58% 10%
rest -20%
What is the standard deviation of return for this asset? Enter answer in percents, accurate to two decimal places.
3. Assume your marginal tax rate, combined federal, state, and local, is 39.7 percent. How many extra dollars must you earn in order to make up for a discretionary spending of $100?
4. You have 558 thousand dollars in the bank. Unfortunately, the bank recently announced that it has incurred significant losses, and is only able to repay 30 cents on the dollar of deposits in excess of FDIC insurance limits, and is going into bankruptcy liquidation. Luckily, FDIC insurance has you covered for 250K. How much money in total will you be able to recover? Enter answer in thousands.