40% chance of -0.1 return 30% chance of 0.1 30% chance of 0.3 what is the variance of returns? i get .4 (.0324) + .3 (.0004)+ .3(.0484)= .1661 schweser says its .0276. did i do some math wrong here? in quant sutdy book q4 on 233
They’re right. Calculate the mean: 0.40 x -0.1 0.30 x 0.1 0.30 x 0.3 Total is 0.08. Now, take the residuals, square them, and weight them. (-0.1 - 0.08)^2 * 0.40 (0.1 - 0.08)^2 * 0.30 (0.3 - 0.08)^2 * 0.30 Result: 0.0276.
> Result: 0.0276. I got that, too. too bad these sort of questions take me > 90 seconds to answer. my goal is to do ethics in 10 minutes