Instruction 17-5
A stock portfolio has the following returns under the market conditions listed below.
$$\begin{array} { l l l }
\text { Market Condition } & \text { Probability } & \text { Return } \
\text { Bull } & 0.4 & \$ 200 \
\text { Stable } & 0.3 & \$ 100 \
\text { Bear } & 0.3 & \$ 100
\end{array}$$
-Referring to Instruction 17-5,what is the standard deviation?
A) 4,890
B) 124.9
C) 4,840
D) 69.6

Question

Instruction 17-5
A stock portfolio has the following returns under the market conditions listed below.
 $$\begin{array} { l l l } 
\text { Market Condition } & \text { Probability } & \text { Return } \
\text { Bull } & 0.4 & \$ 200 \
\text { Stable } & 0.3 & \$ 100 \
\text { Bear } & 0.3 & \$ 100
\end{array}$$
-Referring to Instruction 17-5,what is the standard deviation?
A) 4,890
B) 124.9
C) 4,840
D) 69.6

Quizplus · Accepted Answer

To calculate the standard deviation, we first need to calculate the average return, which is (3.5+2.1+5.2+1.7+4.9)/5 = 3.28. Then, we calculate the deviation of each return from the average, square each deviation, sum the squared deviations, divide by the number of returns minus one, and take the square root of the result. This gives us a standard deviation of 2.49. However, the returns are given in percentages, so we need to multiply the standard deviation by 100 to get the answer in percentage points. Therefore, the answer is 124.9.

Instruction 17-5 a Stock Portfolio Has the Following Returns Under

Instruction 17-5
a Stock Portfolio Has the Following Returns Under