Exhibit 7.16
Use the Information Below for the Following Problem(S)
Based on the economic outlook for the industry a financial analyst covering Top Choice Corporation has determined the following three possible returns given three different states of the economy over the next period.
$$\begin{array} { c c }
\text { Prabability } & \text { Return } \
\hline 0.25 & 0 .02 \
0.50 & 0.14 \
0.25 & 0.30
\end{array}$$
-Refer to Exhibit 7.16.What is the standard deviation for Top Choice Corporation?
A) 0.1%
B) 6.3%
C) 7.9%
D) 9.4%
E) 12.1%

Question

Exhibit 7.16
Use the Information Below for the Following Problem(S)
Based on the economic outlook for the industry a financial analyst covering Top Choice Corporation has determined the following three possible returns given three different states of the economy over the next period.
 $$\begin{array} { c c } 
\text { Prabability } & \text { Return } \
\hline 0.25 & 0 .02 \
0.50 & 0.14 \
0.25 & 0.30
\end{array}$$
-Refer to Exhibit 7.16.What is the standard deviation for Top Choice Corporation?
A) 0.1%
B) 6.3%
C) 7.9%
D) 9.4%
E) 12.1%

Quizplus · Accepted Answer

$$\begin{aligned}
\text { Standard Deviation } & = \sqrt { .25 ( 0.2 - 0.15 ) ^ { 2 } + .5 ( 0.14 - 0.15 ) ^ { 2 } + .25 ( 0.3 - 0.15 ) ^ { 2 } } \
& = \sqrt { .25 ( 0.0025 ) + .5 ( 0.0001 ) + .25 ( .0225 ) } \
& = \sqrt { .00063 + .00005 + .00563 } \
& = \sqrt { 0.00631 } = 0.0794 \text { or } 7.9 \%
\end{aligned}$$

Exhibit 716 Use the Information Below for the Following Problem(S) Based

Exhibit 716
Use the Information Below for the Following Problem(S)
Based