You are considering a security with the following possible rates of return: 
a.Calculate the expected rate of return.
b.Calculate the standard deviation of the returns.
Definitions:
Discount Rate
The interest rate used to determine the present value of future cash flows in discounted cash flow analysis, reflecting the opportunity cost of investment.
Capital Asset Pricing Model
A financial model that describes the relationship between systematic risk and expected return for assets, particularly stocks.
Capital Asset Pricing Model
The Capital Asset Pricing Model (CAPM) is a formula used to determine the expected return on an investment based on its risk relative to the market.
Abandonment Option
A provision in a contract that allows a party to withdraw from the contract before the completion or maturity date.
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