Consider an investment with the following payoffs and ...

[Haya94]

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

[Swizqar]

Answer to Question 1

e

Answer to Question 2

c

[Haya94]

Gracias!

[sarah_brady415]

Thanks for the timely response, appreciate it