What is the standard deviation of the forcasted returns for

What is the standard deviation of the forcasted returns for Flamingo Int?

Forecasted

Return

8%, 3%, -2%

Probability

.30, .55, .15

Solution

sd=sqrt(V(X))

V(X)=E(X²)-(E(X))²

E(X²)=sum(X²*p(x))

E(X)=sum(x*p(x)

E(X)=3.75

E(X²)=24.75

V(X)=24.75-(3.75)^2=10.6875

sd=sqrt(10.6275)=3.26917