In considering the purchase of a certain stock, you attach the following probabilities to
possible changes in the stock price over the next year. $$\begin{array} { | l | l | }
\hline \begin{array} { l }
\text { Stock Price Change During } \
\text { Next Twelve Months (\%) }
\end{array} & \text { Probability } \
\hline + 15 & 0.2 \
\hline + 5 & 0.3 \
\hline 0 & 0.4 \
\hline - 5 & 0.05 \
\hline - 15 & 0.05 \
\hline
\end{array}$$ What is the expected value, the variance, and the standard deviation? Which is the most
likely outcome? Sketch the cumulative distribution function.
.

Question

In considering the purchase of a certain stock, you attach the following probabilities to
possible changes in the stock price over the next year. $$\begin{array} { | l | l | } 
\hline \begin{array} { l } 
\text { Stock Price Change During } \
\text { Next Twelve Months (\%) }
\end{array} & \text { Probability } \
\hline + 15 & 0.2 \
\hline + 5 & 0.3 \
\hline 0 & 0.4 \
\hline - 5 & 0.05 \
\hline - 15 & 0.05 \
\hline
\end{array}$$ What is the expected value, the variance, and the standard deviation? Which is the most
likely outcome? Sketch the cumulative distribution function.
.

Quizplus · Accepted Answer

The Answer of In considering the purchase of a certain stock, you attach the following probabilities to
possible changes in the stock price over the next year. $$\begin{array} { | l | l | } 
\hline \begin{array} { l } 
\text { Stock Price Change During } \
\text { Next Twelve Months (\%) }
\end{array} & \text { Probability } \
\hline + 15 & 0.2 \
\hline + 5 & 0.3 \
\hline 0 & 0.4 \
\hline - 5 & 0.05 \
\hline - 15 & 0.05 \
\hline
\end{array}$$ What is the expected value, the variance, and the standard deviation? Which is the most
likely outcome? Sketch the cumulative distribution function.
.

In Considering the Purchase of a Certain Stock, You Attach