You are considering investing in a project with the following possible

You are considering investing in a project with the following possible outcomes:

States
Probability of
Occurrence
Investment
Returns
State 1: Economic boom 18% 20%
State 2: Economic growth 42% 16%
State 3: Economic decline 30% 3%
State 4: Depression 10% -25%
Calculate the expected rate of return and standard deviation of returns for this investment,
respectively.
A) 8.72%, 12.99% B) 7.35%, 12.99% C) 2.18%, 1.69% D) 3.50%, 1.69%

ANSWER

A