Expected Return and Risk Compute the standard deviation given these four economic states, their likelihoods, and the potential returns:
|
Economic State
|
Probability
|
Return
|
|
Fast Growth
|
0.20
|
100%
|
|
Slow Growth
|
0.50
|
10%
|
|
Recession
|
0.20
|
−1%
|
|
Depression
|
0.10
|
−10%
|
|
|
88.06%
|
|
|
12.19%
|
|
|
38.65%
|
|
|
23.8%
|