Hello! I cannot for the life of me get this math right. Has anyone tried this in excel? I get 3.9% which is the sq root of .001542 Use the following probability distribution to calculate the standard deviation for the portfolio.State of the Economy Probability Return on PortfolioBoom .3 0.3015%Bust .7 0.703%A)6.5%.B)5.5%.C)6.0%.Explanation[0.30 × (0.15 – 0.066)2 + 0.70 × (0.03 – 0.066)2]1/2 = 5.5%.(Study Session 2, Module 8.3, LOS 8.l)

Hi, there seems to be quite a few errors in your copy/pasting of the question, can you make sure it is right? I assume the probabilities are 30% boom with 15% return, and 70% bust with 3% return.So the mean return is 6.6% = (0.3*0.15) + (0.7*0.03)The answer notation is messy too, as the power function is missing.But in essence the answer is correct where std deviation is 5.5% = [0.30*(0.15 – 0.066)^2 + 0.70 × (0.03 – 0.066)^2]^0.5

A CFA Level 1 Discussion About Portfolio Return ?

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- fp92
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  31 Dec 2020 at 9:57 pm
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  Hi, there seems to be quite a few errors in your copy/pasting of the question, can you make sure it is right?
  
  I assume the probabilities are 30% boom with 15% return, and 70% bust with 3% return.
  
  So the mean return is 6.6% = (0.3*0.15) + (0.7*0.03)
  
  The answer notation is messy too, as the power function is missing.
  
  But in essence the answer is correct where std deviation is 5.5% = [0.30*(0.15 – 0.066)^2 + 0.70 × (0.03 – 0.066)^2]^0.5
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