No. San 2018 Question _| i a| Expected rehwn = ZC Probability of then ) x CPossible refven) Ger: E pies Shock % 2 Een =e Spire a 7 He = (G10 X2%)+ C0-60xXS%) + CO-30*1%) a = G-008 + 0-02 + 0.094 = 6.05 @ 6% y aa Dee CO-10 x ~10 &) + CO-60 X5%) + C0-80% 10%) z 70.01 + 0:03 4 9-03 = 0:05 @ 5%. * | Shock y: E cry (Sloe 2 1 Ee = Lee t Eee = C010 x 0%) + (OE X SH) + CO-20x 10%) | = OF 0.03 + 108 | = 0-06 @6% 4 Standard “‘Deviahon = EPs x C Rehwn o = (Variance = i Bock Li Os for + [0.10 x(2% - 6%) [+L 0.60 x (54 - 62 I] +(0:20x(9%-62I] = (- G.008)t (-0-606) + C 0.004%) 4 = ~0-003- 0.006 + 0-009 = Oy Hock Yo = (0:0 x(-10%-5% Ht (0.60 152-52) J + 00-20% (10% -S4)I : (0-10 x ~15%) + 0 + C0-20% 5%) =~ 6.05 + 0.05 = On @praicNo. Sock 2 + a 2[0-10x(0-6%)] + (0-60 <(5%- 6%T4 [0-20 x0 % - 64) =O x -62) +(0-60x 1%) + CO-30% 42%) 2 7 0-086~ 0.006 + 6.019 iss! + 0 4 b) Aardard devabion (6 a meanwe of how spread cut a later eh is oe Tes ied iw a huge number apphcakans ett Slandard _deviaben hele defernine mariert vobrditg, volatility ov be spread of cut priet_fran hiv avert pace When prices move Wildy, sfandard dovetivm. 16 Nigga meaning an _ioverfmneu wll be tslg = ew gendard Aawafen means OQ |pvicerave calms oo Snvetmeds come ni leit OA bow eat rafe environment occurs wen he vide fee tate of infererk, typically sel by a central bait) i lower than the hishose average for a pwlenged pened of foe - Two shrateyies be a ow wferer) tate envitoment aw A) Preferred _tecurther cffer tu ber sf bot shack and bond vefvens a WDacorer _inndlervatued Wigh- yield Reanbig. QOraic