In Q:37, how to calculate the S.D. for each of the Asset? I calculated the SD but i got 4.90 for all the 3 assets using the data and stat functions in my calculator. Am i correct?
\sigma^2 = \sum_{i=1}^3{P\left(scenario\ i\right)\left(r_i - \mu_r\right)^2}
= \frac{1}{3}\left(12\% - 6\%\right)^2 + \frac{1}{3}\left(0\% - 6\%\right)^2 + \frac{1}{3}\left(6\% - 6\%\right)^2
= \frac{1}{3}\left(0.0036 + 0.0036 + 0\right)
= 0.0024
\sigma = \sqrt{0.0024} = 0.048990 = 4.8990\%
Note that you don’t need this to answer question 37.
Thank you for this!!
I hope that it helps.
Yes it did. Thanks a ton!