Question: A new project has an uncertain cash flow. A group meeting has resulted in a consensus that a reasonable way to view the possible risks

A new project has an uncertain cash flow. A group meeting has resulted in a consensus that a reasonable way to view the possible risks and rewards is to say that the project will pay $50,000 with probability 0.2, will pay $100,000 with probability 0.3, will pay $200,000 with probability 0.4, and will pay $400,000 with probability 0.1. How much risk is involved here? Please give both the name and the numerical value of your answer.

Step by Step Solution

3.43 Rating (159 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

The standard deviat... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Practical Business Statistics Questions!