Assume the performance of an investment is indexed to the state of the economy. The economic forecast and the possible return is shown in the table below.
States of Economy Probability of Occurrence Investment Returns
State 1: Strong growth 15% 28%
State 2: Medium growth 45% 22%
State 3: Marginal growth 35% 14%
State 4: No growth 5% -10%
Calculate the expected rate of return for this investment and its standard deviation.
