(Expectedrate of return andrisk) B. J. Gautney Enterprises is evaluating a security. One-year Treasury bills are currently paying3.9percent. Calculate the investment's expected return and its standard deviation. Should Gautney invest in this security? ProbabilityReturn0.20−5%0.504%0.105%0.208%(Clickon the icon in order to copy its contents into aspreadsheet.) Question content area bottomPart 1a. The investment's expected return isenter your response here%.(Round to two decimal places.)b. the investment's standard devation is? round 2 decimal placesc. should gautney invest in this security?

Standard deviation is a variation in the mean value of given data. Standard deviation is a…

(Expected rate of return and risk) B. J. Gautney Enterprises is evaluating a security. One-year Treasury bills are currently paying 3.9 percent. Calculate the investment's expected return and its standard deviation. Should Gautney invest in this security? Probability Return 0.20 −5 % 0.50 4 % 0.10 5 % 0.20 8 %

(Expected rate of return and risk) B. J. Gautney Enterprises is evaluating a security. One-year Treasury bills are currently paying 3.9 percent. Calculate the investment's expected return and its standard deviation. Should Gautney invest in this security? Probability Return 0.20 −5 % 0.50 4 % 0.10 5 % 0.20 8 %

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter7: Corporate Valuation And Stock Valuation

Section: Chapter Questions

Problem 25SP: Start with the partial model in the file Ch07 P25 Build a Model.xlsx on the textbook’s Web site....

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Probability	Return
0.20	−5	%
0.50	4	%
0.10	5	%
0.20	8	%

Question content area bottom

Part 1

a. The investment's expected return is

enter your response here%.

(Round to two decimal places.)

b. the investment's standard devation is? round 2 decimal places

c. should gautney invest in this security?

Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

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