An investor buys an asset at an initial cost of $1,922,596. The investor believes that at the end of one year, the asset could have four possible values. These values are $1,865,665, $2,100,770, $2,165,000 and $2,247,000 with respective probabilities of 27.50%, 32.45%, 26.85% and 13.20%.

 

Required

 1) In dollars and cents, what is the expected value of the asset in 1 year?   

1. 2) In percentage terms to 2 decimal places, what is the expected return on the asset?   
2. 3) In percentage terms to 2 decimal places, what is the expected standard deviation of the return of the asset?

Answer rating: 100% (QA)

To calculate the expected value of the asset we multiply each possible value by its respective proba... View the full answer