Respuesta :
The expected return on portfolio for a security is 18.75 percent then the variance for the asset's returns is 29.6875% .
What is expected return on portfolio?
The variance of a portfolio measures how much the returns depart from the mean, whereas the expected return on portfolio represents the anticipated amount of returns that a portfolio may create.
In the given case scenario the expected return on portfolio or average mean is 18.75% or [tex]\bar{x}[/tex] = 0.1875
Statement of Expected Return using Probability
Return Probability (p) [tex]x-\bar{x}[/tex] [tex](x-\bar{x})^2[/tex]×100 [tex]p(x-\bar{x})^2[/tex]
0.10 0.25 -0.0875 76.5625 19.140625
0.20 0.50 0.0125 1.5625 0.781250
0.25 0.25 0.0625 39.0625 9.765625
Variance = 29.6875 summation of All the three probabilities with respective mean deviation from mean.
Therefore the variance i.e. square of standard deviation from the portfolio expected return is 29.6875%.
Learn more about expected return refer:
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