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(Solved): An analyst has developed the following probability distribution for the rate of return for a common ...



An analyst has developed the following probability distribution for the rate of return for a common stock.

Scenario Probability Rate of Return
1 0.30 ?5%
2 0.45 0%
3 0.25 10%


a. Calculate the expected rate of return. (Round intermediate calculations to at least 4 decimal places.)




b. Calculate the variance and the standard deviation of this probability distribution. (Use the percentage values for your calculations (for example 10% not 0.10). Round intermediate calculations to at least 4 decimal places. Enter your answers as a percentage rounded to 2 decimal places.)



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a. The expected rate of return is calculated by taking the weighted average of the rates of return for each scenario, where the weights are
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