text: Question
  
  # State of Economy Probability Rate of return Strong 0.25 19% Normal 0.5 8 Weak 0.25 -4...
  
   State of Economy Probability Rate of return Strong 0.25 19% Normal 0.5 8 Weak 0.25 -4
  
  What is the stock's expected return? Round your answer to 2 decimal places. Do not round intermediate calculations.
  ___________%
  
  What is the stock's standard deviation? Round your answer to two decimal places. Do not round intermediate calculations.
  ___________%
  
  What is the stock's coefficient of variation? Round your answer to two decimal places. Do not round intermediate calculations.
  
  ___________
  
  1)
  
  Expected return = Probabilities * returns
  
  Expected return = 0.25*0.19 + 0.5*0.08 + 0.25*(-0.04)
  
  Expected return = 0.0475 + 0.04 - 0.01
  
  Expected return = 0.0775 or 7.75%
  
  2)
  
  Standard deviation = [0.25(0.19 - 0.0775)^2 + 0.5(0.08 - 0.0775)^2 + 0.25(-0.04 - 0.0775)^2]^1/2
  
  Standard deviation = [0.003164 + 0.000003 + 0.003452]^1/2
  
  Standard deviation = 0.0814 or 8.14%
  
  3)
  
  coefficient of variation = Standard deviation / return
  
  coefficient of variation = 0.0814 / 0.0775
  
  coefficient of variation = 1.05
  
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