A project has the following projected outcomes: $100, $500, and $800. The probabilities of their outcomes are 10%, 50%, and 40% respectively. What is the standard deviation of these outcomes?

Question

Quizplus · Accepted Answer

The standard deviation is the square root of the variance. The variance is the average of the squared differences from the mean. The mean is the expected value, which is the sum of the products of the outcomes and their probabilities. In this case, the mean is (100 * 0.1) + (500 * 0.5) + (800 * 0.4) = $460. The variance is the sum of the squared differences from the mean, weighted by their probabilities. In this case, the variance is (100 - 460)^2 * 0.1 + (500 - 460)^2 * 0.5 + (800 - 460)^2 * 0.4 = $125,440. The standard deviation is the square root of the variance, which is $354.

A Project Has the Following Projected Outcomes: $100, $500, and $800