An analyst believes that the economic conditions during the next year will either be Strong, Normal or Weak and she thinks that the Simpson Company’s returns will have the following probabilitydistribution. What’s the standard deviationof Simpson’s returns as estimated by this analyst?
STRONG 30% 24%
NORMAL 40% 15%
WEAK 30% -10%.
Please refer attached file for complete solution. Expression typed with the help of Equation writer are missing here.
Economic conditions Probability Return
Solution describes the steps to calculate expected returns and standard deviation of returns.