Standard deviation of the returns


Problem:

Kali's Ski Resort, Inc. stock is quite cyclical. In a boom economy, the stock is expected to return 30% in comparison to 12% in a normal economy and a negative 20% in a recessionary period. The probability of a recession is 15%. There is a 30% chance of a boom economy. The remainder of the time, the economy will be at normal levels.

Required:

Question: What is the standard deviation of the returns on Kali's Ski Resort, Inc. stock? Show your all work and computations.

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Finance Basics: Standard deviation of the returns
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