Hello! I cannot for the life of me get this math right. Has anyone tried this in excel? I get 3.9% which is the sq root of .001542
Use the following probability distribution to calculate the standard deviation for the portfolio.
State of the Economy Probability Return on Portfolio
Boom .3 0.3015%
Bust .7 0.703%
A)
6.5%.
B)
5.5%.
C)
6.0%.
Explanation
[0.30 × (0.15 – 0.066)2 + 0.70 × (0.03 – 0.066)2]1/2 = 5.5%.
(Study Session 2, Module 8.3, LOS 8.l)