What is the expected variance for KMP stock?
You have been given this probability distribution for the holding-period return for KMP stock:
A. 66.04%
B. 69.96%
C. 77.04%
D. 63.72%
E. 78.45%
A. 66.04%
Variance = [0.30 (18 – 10.4)2 + 0.50 (12 10.4)2 + 0.20 (–5 – 10.4)2] = 66.04%.
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