What is the standard deviation of the returns on a stock given the following information? State of Economy Probability of State of Economy Rate of Return if State Occurs Boom .28 .175 Normal .67 .128 Recession .05 .026

3.28%

Explanation:

Calculation for the standard deviation of the returns on a stock

The first step is to find the Expected rate of return using this formula

Expected Return = E[R] = p1*R1 + p2*R2 + p3*R3

Let plug in the formula

Expected Return= 0.28*0.175 + 0.67*0.128 + 0.05*0.026

Expected Return = 0.049 + 0.08576 + 0.0013

Expected Return= 0.13606

Second step is to find the Variance using this formula

Variance = σ2 = p1*(R1-E[R])2 + p2*(R2-E[R])2 + p3*(R3-E[R])2

Let plug in the formula

Variance = σ2 = 0.28*(0.175-0.13606)2 + 0.67*(0.128-0.13606)2 + 0.05*(0.026-0.13606)2

Variance = 0.000424570608 + 0.0000435256119999998 + 0.00060566018

Variance= 0.0010737564

Last step is to find Standard Deviation of the returns on a stock

Note that the Standard Deviation is square-root of variance

Using this formula

Standard Deviation =√Variance

Let plug in the formula

Standard Deviation = σ =√ (0.0010737564)

Standard Deviation= 0.032768222411*100

Standard Deviation= 3.2768222411%

Standard Deviation =3.28% Approximately

Therefore the standard deviation of the returns on a stock will be 3.28%

answer founder's agreement;

-the personal ownership of property

-the influence of consumer demand

explanation:

the command economy prohibits the personal ownership of property.

basically, command economy is defined as the system where a nation’s government is the one that makes all the decisions when it comes to its economy. the government is the one who controls the production of goods and services and regulates the prices and salaries.

therefore, since that the government is the authority, then all kinds of personal ownership of property is prohibited by them.