0:00
All right.
00:01
So suppose i'm given the same two companies to invest in the fast forward funds or the solid state securities.
00:06
And i want to figure out the probability distributions that next year's rate of return would apply.
00:12
So i'm given two different tables of the same security funds.
00:16
Which of the funds offers the lowest risk in case of a market crash? again, lowest risk, i'm still finding the expected risk.
00:23
So i'm really finding the expected value.
00:26
What is the expected value again? well, the expected value is the sum of all the different x values i can get to the different returns times the probability of each of these returns.
00:36
So the expected value of the fast forward funds, what i would do is i would do 0 .18, or excuse me, negative .8 times that probability 0 .08 plus negative 0 .7 times that probability, 0 .03 ,000, so on and so forth until i get to the end.
01:00
And when i do that, this expected value is negative 0 .2133.
01:07
Okay...