You are planning to invest in a new high-tech company, and figure your rate of return over the coming year as in Table 7.6.4 (where 100% says that you doubled your money, €“50% says you lost half, etc.).
a. Find the mean rate of return and explain what it represents.
b. Find the standard deviation of the rate of return and explain what it represents.
c. Find the probability that you will earn more than 40%, according to the table.
d. How would you measure the risk of this investment?

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TABLE 7.6.4 Rates of Return and Probabilities for Four Scenarios Rate of Retum 100% 50 0 50 Probability 0.20 0.40 0.25 0.15