Stock

IA- Expected Rate of Return for X and Y X YProbability Return Probability Return0 .1 -10 0 .2 20 .2 10 0 .2 70 .4 15 0 .3 120 .2 20 0 .2 150 .1 40 0 .1 16 E R1P1 R2P2 R3P3 R4P4 R5P5 X (-0 .10 ) 0 .1 (0 .10 ) 0 .2 (0 .15 ) 0 .4 (0 .20 ) 0 .2 (0 .40 0 .1 (-0 .01 0 .02 0 .06 0 .04 0 .04 0 .15 or 15 Y (0 .02 ) 0 .2 (0 .07 ) 0 .2 (0 .12 ) 0 .3 (0 .15 ) 0 .2 (0 .16 ) 0 .1 0 .004 0 .014 0 .036 0 .03 0 .016 0 .10 or 10The expected rate of return is 15 for X and 10 for YIB- Standard diversionary attack of Expected Returns for X and Y XReturn Probability Deviation from Squared Deviation (x- ?f (x (x ) f (x ) Mean (x- from Mean (x- ?0 .0135Standard Deviation (x- ?2 . f (x ? 0 .0135Standard Deviation YReturn Probability Deviation from Squared Deviation (x- ?f (x (x ) f (x ) Mean (x- from Mean (x-Standard Deviation (x- ?2 . f (x ?0 .00244Standard DeviationThe standard deviation for expected returns is 0 .1162 for X and 0 .0494 for YIC- Question of RiskAlthough stock X has a 5 expected rate of return advantage everyplace Y , X is still the riskier stock . Visual control reveals that there is a 10 chance of a 10 loss for X while the worst scenario for Y is scarcely receiveing a 2 return on enthronement variant , herein calculated with the concept of standard deviation is 0 .1162 for X and 0 .0494 for Y . It is a sufficient march of a wider variability or dispersion of X s value in comparison with YHowever , X is still the wise investment choice in that the risk of loss is just 10 .

Beyond the 10 loss risk , a 10 gain is the least possible return . There is purge a 10 probability of a 40 gain . In contrast , Y promises rates of return ranging from 2 -16 , a significant fact taking into account the presumption that investors are willing to invest only in ventures with verisimilar yields of 10 or moreIIA- plain Interest vs . Compound InterestOther things rival , investments paying increase interest will always learn greater monetary value as compared to those paying mere(a) interest . A two-year investment paying a compound interest is therefore the wiser investment alternative . Simple interests are paid on the principal alone , as exemplified by this formula ix r x t , where i is interest ,is the principal , r is the rate , and t stands for time With the principal unaltered , interests paid on clear periods are also unchanged . An alternative paying compound interest , on...If you want to get a full essay, edict it on our website: Orderessay

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