What Is the Standard Deviation of the Returns on a Stock

question 27

Multiple Choice

What is the standard deviation of the returns on a stock given the following information? $$\begin{array} { l c c } \begin{array} { l } \text { State of } \\\underline{\text { Economy }}\end{array} & \begin{array} { l } \text { Probability of } \\\underline{\text { State of Economy} }\end{array} & \begin{array} { c } \text { Rate of Return } \\\underline{\text { if State Occurs }}\end{array} \\ \text { Boom } & 10 \% & 16 \% \\\text { Normal } & 60 \% & 11 \% \\\text { Recession } & 30 \% & \mathbf { - 8 } \%\end{array}$$

• A)5.80%
• B)7.34%
• C)8.38%
• D)9.15%
• E)9.87%

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