Compute the Standard Deviation of the Expected Return Given These

question 20

Multiple Choice

Compute the standard deviation of the expected return given these three economic states, their likelihoods, and the potential returns: $$\begin{array} { | l | c | r | } \hline \begin{array} { l } \text { Economic } \\\text { State }\end{array} & \text { Probability } & \text { Return } \\\hline \text { Fast Growth } & 0.1 & 50 \% \\\hline \text { Slow Growth } & 0.6 & 8 \% \\\hline \text { Recession } & 0.3 & - 10 \% \\\hline\end{array}$$

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

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Definitions:

Perceptual Set

A mental predisposition to perceive one thing and not another, influenced by expectations, emotions, and culture.

Loch Ness Monster

A mythical creature said to inhabit Loch Ness in the Scottish Highlands, often described as large, long-necked, and with one or more humps protruding from the water.

Sensory Adaptation

The method through which sensory receptors decrease in sensitivity to unchanging stimuli, enabling people to concentrate on environmental variations.

Difference Threshold

The smallest detectable difference between two stimuli or the minimum change in stimulus intensity that can be sensed.