Calculate the Standard Deviation of the following investment: State of the Economy Probability Outcome

A) 31.75%
B) 5.51%
C) 3.02%
D) 0.09%

Question

Calculate the Standard Deviation of the following investment: State of the Economy Probability Outcome

A) 31.75% 
B) 5.51% 
C) 3.02% 
D) 0.09%

Quizplus · Accepted Answer

To calculate the standard deviation of the investment, we need to use the formula:

SD = SQRT [∑(P × (X – μ)2)]

Where:
P = Probability
X = Outcome
μ = Mean

Using this formula, we get the standard deviation as 3.02%. Therefore, option C) is the correct choice. The other options are either too high or too low and do not reflect the actual value of the standard deviation.

Calculate the Standard Deviation of the Following Investment: State of the Economy