The intent of this assignment is to demonstrate that you can evaluate the riskiness of a stock using statistical analysis. An important consideration in investing is not only the expected return, but the likelihood that you would receive that return. There is a tradeoff between risk and return. In order to receive a higher return, you have to bear more risk. The risk can be evaluated by calculating the standard deviation and coefficient of a variation of the stock.
Use the blank table below to help you determine the standard deviation for the following stocks.
Additionally, use the standard deviation to determine the Coefficient of Variation. Finally, list the Range.
Scenario 
Rate of Return 
Expected Return 
Deviation from Expected Return 
Squared Deviation 
Probability 
Squared Deviation x Probability 
(1) 
(2) 
(3) = (2)  (1) 
(4) = (3) x (3) 
(5) 
(4) x (5) 

Recession 




0.25 

Normal 




0.5 

Boom 




0.25 



Standard Deviation = 


CV = 


Range = 

Subject  Business 
Due By (Pacific Time)  10/10/2014 12:00 am 
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