Question: Compute the standard deviation given these four economic states, their likelihoods, and the potential returns: Economic State Probability Return Fast Growth 0.40 50% Slow Growth

Compute the standard deviation given these four economic states, their likelihoods, and the potential returns:

Economic State Probability Return

Fast Growth 0.40 50%

Slow Growth 0.40 10%

Recession 0.10 10%

Depression 0.10 5%

  • 6.71 percent
  • 22.5 percent
  • 23.37 percent
  • 52.20 percent

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