Golden Gun Ltd manufactures handguns and rifles. Government is considering one of two changes in the current gun laws. Should government decide to tighten the gun laws, returns will fall to 9%. There is only a 20% chance that government will relax the gun laws, which will result in increased returns of 16%. Moonraker Ltd Moonraker Ltd, a company that produces equipment used by NASA, has an expected return of 12.50% and a standard deviation of 1.50% 

Required:

a) Calculate the expected return for Golden Gun Ltd. 

b) Calculate the standard deviation for Golden Gun Ltd. 

 c) Which company, Golden Gun Ltd or Moonraker Ltd, will Mr Bond prefer? Motivate your answer with applicable calculations.

Answer rating: 100% (QA)

a To calculate the expected return for Golden Gun Ltd we need to use the probabilities and returns p... View the full answer