An Investor Is Analyzing the Risk of a Possible Investment

question 22

Multiple Choice

An investor is analyzing the risk of a possible investment by producing three different scenarios. Under a pessimistic scenario, the property would produce a BTIRRp of 8%; a most-likely scenario produces a BTIRRp of 12%. The investor assigns the pessimistic scenario a 25% chance of occurring, the most-likely case a 60% chance of occurring, and the optimistic scenario a 15% chance of occurring. What is the standard deviation of the returns?

• A) 0.01249
• B) 0.0090
• C) 0.000156
• D) 0.0949

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Definitions:

1890 Census

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