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Author Question: Consider an investment with the following payoffs and probabilities: State of the Economy ... (Read 12 times)

Haya94

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on: Jul 1, 2018
Consider an investment with the following payoffs and probabilities: State of the Economy Probability Return GDP grows slowly .70 1,000 GDP grow fast .30 2,000 Let the expected value in this example be 1,300 . How do we find the standard deviation of the investment?
 a.  =   (1000-1300)2 + (2000-1300)2
  b.  =   (1000-1300) + (2000-1300)
  c.  =   (.5)(1000-1300)2 + (.5)(2000-1300)2
  d.  =   (.7)(1000-1300) + (.3)(2000-1300)
  e.  =   (.7)(1000-1300)2 + (.3)(2000-1300)2

Question 2

If a car salesman is paid a fixed salary, the owner is most likely to see
 a. A large volume of sales, with large margins
  b. A large volume of sales with no margins
 c. Low to no sales with low margins
 d. Low sales but with large margins


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Swizqar

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Reply #1 on: Jul 1, 2018
Answer to Question 1

e

Answer to Question 2

c


Haya94

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Reply 2 on: Jul 1, 2018
Thanks for the timely response, appreciate it

Joy Chen

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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