Consider an Investment with the Following Payoffs and Probabilities $\sigma$ = $\surd$

question 3

Multiple Choice

Consider an investment with the following payoffs and probabilities:
Let the expected value in this example be 1,300.How do we find the standard deviation of the investment?

• A) \(\sigma\) = \(\surd\) { (1000-1300)² + (2000-1300)² }
• B) \(\sigma\) = \(\surd\) { (1000-1300)+ (2000-1300)}
• C) \(\sigma\)= \(\surd\) { (.5)(1000-1300)² + (.5)(2000-1300)² }
• D) \(\sigma\)= \(\surd\) { (.7)(1000-1300)+ (.3)(2000-1300)}
• E)\(\sigma\)= \(\surd\) { (.7)(1000-1300)² + (.3)(2000-1300)² }

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