Table 7 gives the probability distribution for the possible returns from two different investments. (a) Compute the

Question:

Table 7 gives the probability for the possible returns from two different investments.
(a) Compute the mean and the variance for each investment.
(b) Which investment has the higher (i.e., mean)?
(c) Which investment is less risky (i.e., has lesser variance)?

Table 7 Investment A Investment B Return Return (S millions) Probability ($ millions) Probability -10 .2 .3 .2 20 10 .4

Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most... Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these...