Compute the Standard Deviation of the Expected Return Given These

question 32

Multiple Choice

Compute the standard deviation of the expected return given these three economic states, their likelihoods, and the potential returns: Economic State
Probability
Return
Fast Growth
0) 1
50%
Slow Growth
0) 6
8%
Recession
0) 3
-10%

• A)6.8 percent
• B)16.5 percent
• C)21.5 percent
• D)46.4 percent

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Definitions:

NPV

Net Present Value; a method used in capital budgeting to evaluate the profitability of an investment or project.

IRR

Stands for Internal Rate of Return, a financial metric used to estimate the profitability of potential investments.

MIRR

The Modified Internal Rate of Return, which adjusts the IRR for the cost of capital and provides a better indication of a project's efficiency and profitability.

IRR

Internal Rate of Return; a metric in finance that helps in calculating the expected profitability of prospective investments.