Answer: 16.67
Explanation:
The expected return (D1) = (20% + 25% + 30%) / 3 = 75% / 3 = 25%
Variance for 2013 = (20% - 25%)^2 = 25
Variance for 2014 = (25% - 25%)^2 = 0
Variance for 2015 = (30% - 25%)^2 = 25
Variance for Alpha stock will now be:
= (25% + 0 + 25%) / 3
= 50% / 3
= 16.67
