Question: 1. Using the following two probability distributions, what are the (a) expected return, (b) standard deviation, and (c) coefficient of variation of each probability distribution

1. Using the following two probability distributions, what are the (a) expected return, (b) standard deviation, and (c) coefficient of variation of each probability distribution scenario? In addition, explain how the risk and return of an investment are related.

Scenario 1
Probability	Payoff
0.2	19.0%
0.7	9.0
0.1	4.0

Scenario 2
Probability	Payoff
0.45	32.0%
0.35	-4.0
0.20	-20.0

2. Identify relevant and irrelevant risk, and explain how one can reduce irrelevant risk in investment decisions. 3. In regards to when an investor purchases an investment, describe how an investor should determine the appropriate rate of return that should be earned. 4. Identify different types of risk, and classify each as relevant or irrelevant with respect to determining an investments required rate of return.

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