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Supposing the return from an investment has the following probability distribution   Return   Probability     R (%)   8                 0.2   10               0.2   12               0.5   14               0.1   Required: What is the expected return of the investment? What is the risk as measured by the standard deviation of  expected returns?

Supposing the return from an investment has the following probability distribution   Return   Probability     R (%)   8                 0.2   10               0.2   12               0.5   14               0.1   Required: What is the expected return of the investment? What is the risk as measured by the standard deviation of  expected returns?

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter8: Standard Costs And Variances
Section: Chapter Questions
Problem 4MC: This variance is the difference involving spending more or using more than the standard amount. A....
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Supposing the return from an investment has the following probability distribution

  Return   Probability  

  R (%)

  8                 0.2

  10               0.2

  12               0.5

  14               0.1

 

Required:

What is the expected return of the investment?
What is the risk as measured by the standard deviation of  expected returns?
Return (R) Exp. Ret. Prob. P (a) Exp. Ret. P. x (c)= a x R Deviation R-R Variance Standard deviation is the square root of variance Dev a(R-R)²
Transcribed Image Text:Return (R) Exp. Ret. Prob. P (a) Exp. Ret. P. x (c)= a x R Deviation R-R Variance Standard deviation is the square root of variance Dev a(R-R)²
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