Problem:
John is considering an investment in monsters inc and has gathered the information in the following table.
Required:
What is the expected standard deviation for a share of the firms stock?
Note: Please provide reasons to support your answer.
| State of the economy |
Probability of the State |
Conditional Expected Return Monsters INC |
| Recession |
0.25 |
-20% |
| Steady |
0.60 |
10% |
| Boom |
0.15 |
35% |