Assume that you expect to hold a $20,000 investment for one year. it is forecasted to have a year end value of $21,000 with a 30% probability; a year end value of $24,000 with a 45% probability; and a year end value of $30,000 with a 25% probability. what is the standard deviation of the holding period return for this investment?

$3,762.98

Step-by-step explanation:

Let's compute first the expectancy E (the expected value) of the investment:

E = 30% of 21,000 + 45% of 24,000 + 25% of 30,000 =

0.3*21,000 + 0.45*24,000 + 0.25*30,000 = $24,600

The standard deviation s is

When replacing the expectancy in this formula, we get:

area of part 1:

a1=base*height/2=(8+2)*(8-2-2-1)/2=10*3/2=15 ft^2

area of part 2:

a2=length*width=(8+2)*1=10 ft2

area of part 3:

a3=length*width=8*2=16 ft2

total shaded area : a1+a2+a3=41 ft2

total area of the reactangle : a=16*8=128 ft2

total area of the nonshaded region : 128-41=87 ft2

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step-by-step explanation:

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