A project has a 60% chance of doubling your investment in 1 year and a 40% chance of losing half your money. What is the standard deviation of this investment?
A) 25%
B) 50%
C) 62%
D) 73%

Name: A project has a 60% chance of doubling your investment in 1 year and a 40% chance of losing half your money. What is the standard deviation of this investment? A) 25% B) 50% C) 62% D) 73%
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Question

Quizplus · Accepted Answer

E[r_p] = (.60)(1) + (.40)(-.5) = .40 σ²rp = (.60)(1 - .40)² + (.40)(-.5 - .40)² = .54 σ_rp = .73

A Project Has a 60% Chance of Doubling Your Investment