expected returns for the franchise is as follows: What is the expected rate of return for an
investment in Franchise A? What is the standard deviation?
Solution
Answer:-
Standered Deviation = (R% - Expected return)2 * Pi
= 119.472
= 10.93Probability (Pi)Rate of return (R%)Expected return = (Pi * R%)(R% - Expected return)2
* Pi.1-20%=(.1 * -20%) = -2%=(20% - 6.3%)2 * .1 =
69.169.20%0%0.47%2.8%.196.215%3%15.138.125%2.5%34.969TOTAL6.3%119.472