Question

What are the standard deviations of returns on stocks X and Y ?

Solution

Verified

Step 1

1 of 4

In order to find the standard deviation for both of these stocks we first need to find the variance. Because we completed the last problem we know that the expected return of stock X is 20% and the expected return of stock Y is 10%. These variables along with the other given inputs are all we need to determine the variance for each stock.

We can use the below equation in order to find the variance. In this equation we have each probability and to find the deviation from the mean we can subtract the overall expected return from each of the given returns in the various markets.

Create an account to view solutions

By signing up, you accept Quizlet's Terms of Service and Privacy Policy
Continue with GoogleContinue with Facebook

Create an account to view solutions

By signing up, you accept Quizlet's Terms of Service and Privacy Policy
Continue with GoogleContinue with Facebook

Related questions