What Is the Expected Return on a Bond If the Return

question 109

Essay

What is the expected return on a bond if the return is 9% two-thirds of the time and 3% one-third of the time? What is the standard deviation of the returns on this bond? Would you prefer this bond or one with an identical expected return and a standard deviation of 4.5? Why?

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Definitions:

Prototype

In programming, a prototype refers to the declaration of a function specifying its return type, name, and parameters, but not its body.

Void

In programming, void indicates that a function does not return a value.

Link

In computing, a reference that points to another document or a specific part of a document, commonly used on the web.

Header File

A file containing C or C++ declarations and macro definitions to be shared between several source files or to make them available to a large code base.