A B E F G H Note: Please put your answers only in the section below the Bold Red sentence at the end of the Required section below. 4 5 Investors have made the following forecast about the returns from investing in securities issued by two companies: 6 000 Nm Probability of Rate of Rate of State of the this state of the return from return from Economy economy Company Company Z 8 Boom 5% 19% 51% Good times 20% 17% 31% 10 Average times 50% 15% 20% 11 Bad times 15% 6% -6% 12 Recession 10% 1% -27% 13 14 Required: 15 A. Calculate the expected return of each distribution. B. Calculate the standard deviation of each distribution. 16 17 C. In terms of total risk, which security is safer? 18 19 Your answers to this open-ended assignment should be placed in the space below 41 B Calculations of Standard Deviation 42 43 Company X 44 Deviation 45 Probability Return Deviation Squared Product 46 47 48 49 50 51 Variance 52 Standard deviation 53 54 55 56 Company Z 57 Deviation 58 Probability Return Deviation Squared Product 59